Australian Dollar Forecast: AUD/USD In Focus As Traders Await Omicron News, RBA

Australian Dollar, AUD/USD, Omicron, Risk Trends, RBA, ANZ Commodity Index: Talking Points

  • The risk-sensitive Australian dollar in focus as APAC trading begins.
  • Quiet event calendar leaves traders eyeing prevailing risk trends.
  • AUD/USD starts the week with small bounce above major resistance.

Monday, Dec. 6's Asia-Pacific Forecast

Asia-Pacific markets are set to begin trading on a cautious tone following last week’s volatility. The economic docket is rather sparse, which may leave prevailing risk trends in control.

Last week, risk aversion gripped the broader markets as the emerging Omicron variant weighed on sentiment. Wall Street’s ‘fear gauge’ VIX index rose to its highest level since the pandemic started. Investors are continuously assessing the newswires to evaluate the potential threat the new strain poses to financial markets.

Preliminary reports suggest the Omicron variant may be likely more contagious and potentially less deadly, a combination that actually may bode well for the pandemic and possibly bring about its accelerated end.

Britain reported over 100 newly identified Omicron infections over the weekend, and Denmark has nearly 200 cases. The United States has reported a handful of cases. One positive side effect of the Omicron variant is the large increase it has caused in vaccinations, with the CDC reporting the highest daily totals seen since May.

The Australian dollar will be in focus for today’s session, with the Reserve Bank of Australia’s policy decision set to cross the wires on Tuesday, Dec. 7. Analysts expect the RBA to hold rates steady in its last meeting of the year.

However, markets see a rate increase new summer, which is much earlier than the central bank’s forecast for 2024. Any hint that RBA Chief Lowe may be growing more hawkish may send AUD/USD higher. The currency pair has fallen for five straight weeks now and is currently at its yearly low.

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