The Australian dollar climbed to its highest levels against the greenback since December of 2018 in early trading on Friday. The Aussie has been lifted by recent positive Sino-U.S. trade developments and better than expected economic data.
Meanwhile, the US dollar came under pressure following a speech from Federal Reserve Chair Jerome Powell at the annual symposium traditionally held in Jackson Hole, Wyoming. Powell stated that the Fed would adopt an average inflation target, suggesting that interest rates are likely to stay low even if inflation rises.
On Tuesday, US and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal. The agreement was reached in a telephone call between U.S. Trade Representative Robert Lighthizer, U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He, marking their first formal dialogue since early May. China is Australia´s largest trading partner and positive news relating to US/China trade relations is typically bullish for the Aussie dollar.
More broadly, risk appetite among investors has also been lifted by recent developments relating to Covid-19 drug hopes. A report in the Financial Times that President Trump is looking to fast-track the approval of a UK Covid-19 vaccine before the US election energized traders and sent equity markets higher. The vaccine is being developed in a partnership between AstraZeneca and Oxford University. The Australian dollar, a risk asset, was also underpinned by the news.
Looking at the AUD/USD daily chart we can see that rising trendline support lies below. Bulls eye the prior high of 0.7395 from December 2018 as the next major target level to the upside.