AUD\USD on the rise as Omicron risk falls back

By: Miguel A. Rodriguez

17:54, 23 December 2021

AUD\USD experiences monthly high levels as market risk aversion sentiments start to fade away

Investor risk sentiment has improved substantially in the last two days.

Better news about the Omicron variant severity and the approval of Pfizer's drug to treat the disease have reduced concern in the market, even though restrictive measures continue to be taken in European countries. China has lockdown an entire region with 13 million inhabitants as the number of infected cases in the world grows exponentially.

All this will impact the next growth figures for the economy, especially in the services sector, but the market does not seem to want to look at these aspects and prefers to start what appears to be the end-of-year rally.

The American figures published yesterday did not significantly impact the market. The revised GDP for the third quarter slightly exceeded the forecasts with a modest 2.3%, which is a low figure considering the authorities' enormous amount of fiscal and monetary stimulus.

The personal consumption expenditure - remained at high levels, well above the levels at which the Federal Reserve feels comfortable, which does nothing more than ensure the change in the Fed's bias and increases the interest rates that the market expects as early as the end of the first quarter of next year.

Only the consumer confidence data surprised the markets with an increase to 115.8 from the expected 110.8, which suggests that the worsening of the pandemic situation is not affecting consumer expectations and may have been the trigger for the bullish momentum in stock markets.

The best performing index was Nasdaq, with a rise of 1.26% driven by most of the big tech stocks with the sole exception of Facebook, which lagged with a drop of 1.18%. In the case of Nasdaq, the expectations of interest rate hikes do not seem, for the moment, to affect it despite the sensitivity of the technology stocks to the increase in financing.

The AUD/USD pair surpasses the 0.7162 area, which is the upper level of the lateral consolidation band of the last ten days and is approaching the 100-day moving average located at 0.7294, which would now act as a resistance point.

Sources: Bloomberg, Reuters.

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