Forex Market: AUD/USD hits a fresh one-month high as COVID-19 vaccine hopes, macro data boost investor risk appetite

AUD/USD extended gains from the prior trading day and touched a fresh one-month high in early Asian session on Wednesday, as news of progress in development of a potential coronavirus vaccine and upbeat US CPI inflation numbers fueled demand for risk-sensitive currencies such as the Aussie.

Reports emerged that Moderna Inc’s experimental COVID-19 vaccine had showed it was safe and triggered immune responses in all 45 healthy volunteers during an early-stage study.

The US Dollar lost some of its safe haven appeal after a Tuesday report by the US Bureau of Labor Statistics showed annual consumer inflation in the country had risen to its highest level in three months in June, which eased concerns over deflationary pressures from the pandemic-induced downturn. Annual CPI inflation accelerated to 0.6% in June from a 4 1/2-year low of 0.1% in May. Annual Core CPI inflation, which does not take into account volatile categories such as food and energy, remained steady at 1.2% in June.

Meanwhile, in Australia, a survey by the Melbourne Institute and Westpac Banking Corp showed consumer sentiment had been shaken following a spike in new coronavirus infections in Victoria and the re-imposition of lockdown restrictions in Melbourne. The respective Consumer Sentiment Index dropped at a monthly rate of 6.1% to a reading of 87.9 in July, after surging 6.3% in June.

As of 6:50 GMT on Wednesday AUD/USD was edging up 0.41% to trade at 0.7004, after earlier touching an intraday high of 0.7018, or a level not seen since June 10th (0.7064). The major pair has risen 0.77% so far this week, after recording three successive weeks of gains.

On today’s economic calendar, a report by the Board of Governors of the Federal Reserve at 13:15 GMT may show industrial production in the country expanded at a monthly rate of 4.3% in June, according to market expectations, after rising 1.4% in May. Manufacturing output probably rose 5.6% in June from a month ago, following a 3.8% surge in May.

At 16:00 GMT Federal Reserve President for Philadelphia Patrick Harker is expected to speak on US economic outlook at a Center City Proprietors Association online event.

At 18:00 GMT the Federal Reserve Bank is to release its ”Beige Book” report, which is published eight times during the year. Each of the banks in the 12 Federal Reserve Districts gathers data in regard to current economic situation in the country on the basis of interviews with key business contacts, economists, market experts and other sources.

Bond Yield Spread

The spread between 2-year Australian and 2-year US bond yields, which reflects the flow of funds in a short term, equaled 11.1 basis points (0.111%) as of 6:15 GMT on Wednesday, down from 11.2 basis points on July 14th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 0.6958
R1 – 0.6995
R2 – 0.7014
R3 – 0.7051
R4 – 0.7088

S1 – 0.6938
S2 – 0.6902
S3 – 0.6882
S4 – 0.6863