​Strong Rally Puts AUD/USD on Track for New Yearly High

WikiFX News (21 Nov.) - This week, AUD/USD saw its consecutive daily gains enduring and once tested the monthly high of 0.7340. The pair may find potential upsides as fueled by the recent optimism.

Fifteen nations, including Japan, South Korea, and Australia, have entered into the largest free-trade agreement in history, which helped ease tensions between Australia and one of these countries. Besides, the positive news on the Covid-19 vaccine also fueled risk sentiment, stimulating the risk-sensitive Australian dollar.

Previously, the RBA planned to stimulate the economy by purchasing A$100 billion of 5 to 10-year government bonds and signaled negative interest rates. But at its November meeting, the RBA committee stated that negative interest rates were not necessary.

Moving forward, investors are bearish on the US economy that is struggling with the domestic political crisis and Covid-19 outbreaks. With that said, the Australian dollar may become a new haven for capital as the country is far away from the epicenters of the pandemic in the US and Europe, despite shocks from the global economic recession.

Analysts at Commerzbank noted AUD/USD could move higher before hitting the September high of 0.7413 in the near term, and a further breakout above 0.75 may be on the cards.

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Chart: Trend of AUD/USD