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Market risk sentiment rises, benefiting riskier currencies such as AUD and pushing down USD

• US Dollar down, benefiting riskier currencies and assets
• Australia’s vaccination program kicks off this week
• AUD boosted by rising iron ore and copper

US Dollar was down on Monday morning in Asia, falling to a 3-year low against major currencies such as AUD and GBP, primarily supported by the rising risk sentiment amid continued progress on vaccinations across the globe. According to Commodity Futures Trading Commission, dollar’s net short positioning fell to $29.09 billion during the previous week, and this is the lowest level since mid-December. On the other hand, Bitcoin has reached over $57,000 to a record $57,553, as mainstream acceptance of the digital asset continues to increase. Just as Bitcoin’s market cap broke the $1 trillion record on Friday, Ethereum also refreshed its all-time high on Saturday to $2,040.62. However, Elon Musk, the billionaire who adopted Bitcoin earlier, said on Saturday that the price of Bitcoin and Ethereum did seem high.

Australia’s vaccination program officially kicks off this week. Prime Minister Morrison described it as a “historic day” for the country. The initial phase will deliver thousands of doses to healthcare professionals and priority patients. Accordingly, rating agency Fitch commented that risks to Australia’s economy will likely be erased by the vaccine and maintained the country’s AAA credit rating, although the outlook still remains negative.

Yet before the vaccine boosts AUD, it has already risen nearly 1.5% last week against USD as prices on iron ore and copper skyrocketed. Some investors are beginning to embrace a possible commodity super cycle. If this scenario plays out, AUD will be the primary beneficiary to enjoy the rising commodity prices. In 2020, Australia exported nearly $120 billion AUD worth of iron, and in 2021 it may likely break the record along with the growing demand from China’s economic growth.