AUD/USD refreshes monthly top above 0.7300 as ASX 200 probes February high

• AUD/USD extends Friday’s recovery moves amid cautious optimism.
• Australia’s CBA PMIs flashed upbeat data for November, Treasurer Frydenberg suggested tax break extension.
• Virus woes battle vaccine/treatment hopes, the tussle between the US Fed and Treasury challenges the risks.
• US PMIs, virus updates and news on Fed/Treasury drama will be the key.

AUD/USD rises to the day’s high near 0.7320, up 0.11% intraday, during Monday’s Asian trading. The pair recently gained from the positive shift in the risk-tone sentiment as well as upbeat data from Australia.

The preliminary readings of the Common Wealth Bank’s (CBA) Manufacturing PMI for November crossed 54.2 market consensus with 56.1 whereas Services PMI also rose past-53.8 expected to 54.9. As a result, Composite PMI crossed 53.5 prior to 54.7 mark.

Not only the data but upbeat prints of risk catalysts like S&P 500 Futures and ASX 200 also pleased the aussie bulls off-late. Further, news that the Aussie Treasurer Josh Frydenberg signaled a tax-cut extension for the domestic businesses, as indicated by the Australian Financial Review (AFR), also helps the risk barometers. While portraying the same, S&P 500 Futures print 0.20% intraday gains whereas ASX 200 challenges the late-February highs with 0.75% gains on a day to 6,589 by press time.

Mainly supporting the risk barometers are hopes that the coronavirus (COVID-19) vaccine/treatment will be out soon. After Pfizer’s 95% effective rate, Regeneron gets the US Food and Drug Administration’s approval for its antibody treatment for emergency use.

However, the tension between the US Federal Reserve and Treasury, concerning the recall of $500 billion and its impact on emergency stimulus plans, join the sustained rise in the global covid numbers to challenge the optimists. Also questioning the upside momentum could be uncertainty surrounding Brexit and the much-awaited COVID-19 stimulus from the US.

Looking forward, the flash PMIs from the US and risk catalysts are likely to direct near-term AUD/USD moves.

Technical analysis

A clear break above 0.7340/45, comprising the mid-September high and late-August low, gains AUD/USD bulls’ attention unless the quote breaks the one-week-old support line, at 0.7270 now.