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USD direction pending key economic indicators, AUD and NZD have set to fly

・ U.S. presidential transition begins, with former Fed chairwoman Janet Yellen appointed as Treasury Secretary
・ Positive market sentiment has driven Dow Jones above 30,000 for the first time
・ AUD benefits from U.S. momentum, and Kiwi continues to fly,

After 3 weeks of legal failure to reclaim his presidency, Donald Trump has agreed to initiate the transition procedure. Along with Biden’s appointment of Janet Yellen, the former Fed chairwoman, as Treasury Secretary, the market is seeing these signs as a positive signal. Dow Jones has reached 30,000 for the first time, creating a promising milestone. But more information is needed to assure investors on the USD outlook. As a result, although USD is getting some momentum, currently it is still losing grounds against key FX peers. Major direction still pending key indicators such as Q3 GDP and real stimulus, as the question has shifted from “if” to “when” and “how much”.

AUD has found its place in the wave of global optimism. As the U.S. presidency transition and vaccine development boosting the global market, growth-linked and currencies are becoming the investment focus. Many of Australia’s largest trading partners are located in the APAC region, where the COVID impact is wearing off and economic conditions are promising. The growth outlook for Australia, backed by global optimism and RBA (Reserve Bank of Australia)’s decision on a 15-bps rate cut as expected, is likely a sign that Australian Dollar will finally yield bullish breakouts.

Not far from Australia, Kiwi is flying in the same direction. New Zealand’s government has proposed to add house prices to central bank’s remit to rein in an overheating real-estate market. NZD/USD has hit 0.7000 for the first time in 2 years. Investors saw less chance of further easing and thus reduced bets on even lower interest rates.