Australian Dollar Outlook: Rising Iron and Copper Prices to Bolster AUD/USD
AUD/USD, AU Vaccine Program, Iron Ore, Copper– Talking Points
- Australia’s Covid vaccination program officially kicks off this week
- Rising iron ore and copper prices are bolstering AUD sentiment
- AUD/USD eyes 0.7900 psychological level as prices push higher
The Australian Covid-19 vaccination program officially started this week. Australian Prime Minister Scott Morrison, along with a group of aged care residents, received a dose of Pfizer’s vaccine. Prime Minister Morrison described it as a ‘historic day’ for the country. The initial phase is set to deliver thousands of vaccine doses to healthcare workers and other priority patients in the coming weeks.
Aussie-Dollar sentiment may receive a boost if the vaccination program’s initial rollout is smoothly administered. AUD/USD gained nearly 1.50% last week as rising commodity prices bolstered the pair’s outlook. Iron ore – one of Australia’s main exports – is trading near 10-year highs after benchmark future prices surged late last week as Chinese markets reopened following the Lunar New Year holiday break.
Copper prices also rose last week and many investors are beginning to embrace a possible commodity supercycle. If that scenario plays out, such as the supercycle seen prior to the 2008 financial crisis, the Australian Dollar is a prime candidate to enjoy the spoils of rising commodity prices. Australia exported nearly A$120 billion of iron in 2020 and 2021 may be on track to break that figure as China’s economic growth fuels demand for the metal ore.
AUD/USD, Iron Ore, Copper – Daily Chart
Australian Dollar Technical Outlook
AUD/USD surged above 0.7850 last week and momentum appears poised to continue pulling prices higher. The Relative Strength Index (RSI) has trended higher along with price action but remains below the 70 overbought level. MACD is also bullishly postured with a growing divergence to the upside. The 0.7900 psychological price level will likely come into play if sentiment holds through this week.
AUD/USD Daily Price Chart
Chart created with TradingView
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--- Written by Thomas Westwater, Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.