Market Update: 19 November 2020
As both Pfizer and Moderna show very encouraging signs for their vaccine, the pandemic is escalating in large parts of the world, with Tokyo on the verge of lockdown and France reaching 2million cases. The AUD is trading in pretty close step with global equity markets and in a similar risk-on/risk-off fashion as it did in the wake of the GFC. There remains plenty to cause fluctuating risk appetite in the months ahead and thus we expect the path for the AUD to be volatile, however, following a broad trend of appreciation; that could see AUD/USD hit 0.7500 before Christmas.
Elsewhere, it appears that the UK is close to reaching an agreement with the EU, with a deal likely to be signed early next week, which will in turn be good for the Pound, however more against the USD and Euro than the AUD. Being out of the European Bureaucracy arguably gives Britain more flexibility with regards to its economic stimulus options and thus we favour an outperformance of Sterling particularly against the Euro In 2021.
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