The Australian dollar has recorded considerable losses in the Thursday session. AUD/USD is currently trading at 0.7749, down 0.69% on the day. The Aussie is having its worst day since October. Given the strong gains that the currency has racked up, some of these losses can be attributed to profit-taking.
Australia Building Approvals Climb
There was positive news from Australia’s construction sector on Thursday. In November, Building Approvals for total dwellings rose 2.6%, marking a third successive again. Private sector approvals are on a tear and climbed to their highest level since 1999, according to the Australian Bureau of Statistics. The construction sector continues to expand and has weathered the Covid storm quite well.
The news was not as good from Australia’s trade balance, as the surplus decreased to A$5.02 billion in November, down from A$7.46 billion beforehand. Still, there is optimism that 2021 will be a better year for Australia’s economy. The roll-out of Covid vaccines should keep Covid-19 under control and bolster the global economy, which is good news for Australia’s export-reliant economy.
The US dollar remains on the defensive, and cyclical currencies like the Australian dollar have outperformed. The dramatic news of Trump supporters attacking the US Senate overshadowed, to some extent, Georgia’s senate race on Tuesday. The elections for both seats were won by razor-thin margins, with the Democrats emerging victorious in both instances. This marks a significant shift in power politics in Washington, as the Democrats have now taken control of the presidency and both houses of Congress. This shift is expected to have a strong effect on the financial markets, as the Democrats will now have a free hand to enact their legislative agenda, including more stimulus and higher taxes. With more dollars flooding the economy in the form of stimulus, the US dollar’s deprecation could well continue in the early part of 2021.
AUD/USD Technical
- There is resistance at 0.76840. Above, there is resistance at 0.7805
- In the Asian session, the pair dipped below support at 0.7753. The next support level is at 0.7699
