Forex Market: AUD/USD eases from eight-week highs, but remains supported above 0.7250 as markets weigh COVID-19 vaccine progress

AUD/USD remained mostly steady in mid-European session on Tuesday, as markets mulled recent news over progress in a COVID-19 vaccine development.

Yesterday the pair surged to highs unseen in almost eight weeks, after reports emerged that Pfizer Inc’s experimental vaccine had proven to be more than 90% effective against the COVID-19 disease, based on initial trial results. Still, however, mass rollouts of the vaccine will probably not occur by the end of this year.

“Perhaps the market did overreact to the vaccine, given there’s still some way to go prove that it’s safe,” Westpac currency analyst Imre Speizer said.

“What they’ve shown is that it’s reasonably effective, safety is another stage. Once the market looked into the finer print of what these results were, maybe they backed off the trade a bit,” Speizer added, referring to AUD/USD easing from intraday highs to close almost flat on Monday.

Yet, according to MUFG currency analyst Lee Hardman, regardless of the uncertainties, the announcement is “an important step forward to exit the COVID crisis and provides a reminder not to bet against human ingenuity.”

“It supports our baseline assumption behind our FX Outlook that effective vaccines will be implemented next year,” Hardman said.

As of 10:25 GMT on Tuesday AUD/USD was inching up 0.07% to trade at 0.7282, while moving within a daily range of 0.7266-0.7295. Yesterday it climbed as high as 0.7340, or its strongest level since September 16th (0.7345). The major pair has risen 3.73% so far in November, after retreating 1.87% in October.

In terms of US macroeconomic data, today market players will be paying attention to the monthly report on job openings for September due out at 15:00 GMT.

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 -6.6 basis points (-0.066%) as of 9:15 GMT on Tuesday, or unchanged compared to November 9th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 0.7295
R1 – 0.7323
R2 – 0.7368
R3 – 0.7396
R4 – 0.7424

S1 – 0.7249
S2 – 0.7221
S3 – 0.7176
S4 – 0.7131