AUD/USD Exchange Rate Rises as Australia Announces Targets for Covid-19 Vaccinations
The Australian Dollar to US Dollar exchange rate rose by 0.2% today. The pairing is currently trading around $0.77.
The ‘Aussie’ rose against the US Dollar today despite Australian markets being closed for the bank holiday Australia Day.
However, the risk-sensitive Australian Dollar has benefited from the announcement that Australia had given its approval for the Pfizer-BioNTech vaccine.
Analysts at Reuters commented:
‘Australia on Monday approved the Pfizer-BioNTech COVID-19 vaccine for use but warned AstraZeneca’s international production problems mean the country would need to distribute a locally manufactured shot earlier than planned.
‘Australia has set a target of 4 million vaccine doses by April. It has also committed to supplying vaccines to Pacific Island nations on a later timetable.’
As a result, AUD investors are now more confident that Australia can begin to take steps to lowering Covid-19 infection rates and recovering its economy.
BREAKING: FIRST #COVID19 VACCINE APPROVED FOR USE IN AUSTRALIA. This vaccine's rapid development builds on decades of investment & expertise in #medicalresearch around the world. Thank you & congrats to all our medical researchers ????https://t.co/jmMWCzsof2
— AAMRI (@AAMRI_Aus) January 24, 2021
US Dollar Struggles as More Countries Approve Coronavirus Vaccines
The US Dollar struggled against ‘Aussie’ today as demand for the safe-haven ‘Greenback’ has suffered from improving risk sentiment as more countries have approved Covid-19 vaccines.
Last week also saw US President Joe Biden outline his administration’s economic plans to bolster the American economy from the effects of the Covid-19 pandemic.
As a result, demand for the safe-haven USD has been compromised by growing hopes that the US economy – the largest in the world – could begin to recover later this year.
Michelle Meyer, US economist at Bank of America Securities, said:
‘There are crosswinds to begin 2021 as fiscal stimulus helps to offset the virus and targeted lockdowns. The vaccine rollout will neutralize the latter over the course of the year.’
‘And upside risks to our…growth forecast are building if the Democrat-controlled government can pass additional stimulus. The high level of virus cases is extremely disheartening but the more that the virus weighs on growth, the more likely that stimulus will be passed.’
USD investors will be awaiting today’s speech from the 46th President of the United States Joe Biden.
Any further announcements regarding the US stimulus package would further weaken demand for the safe-haven US Dollar.
Could Positive US Consumer Confidence Data Weaken Demand for the Safe-Haven ‘Greenback’?
US Dollar traders will be awaiting tomorrow’s release of January’s US Consumer Confidence data.
Any improvement in the outlook for the world’s largest economy would further weigh on demand for the safe-haven USD.
In Australian economic news, tomorrow will see the publication of December’s Westpac Leading Index.
If this shows an uptick in the Australian economy, we could see the ‘Aussie’ head higher as optimism grows for the nation’s economic recovery in the months ahead.
Now that Australia as approved the rollout of a Covid-19 vaccine, we could see the Australian Dollar continue to benefit throughout this week.