The aussie leads gains in the major currencies space today
What's not to like about the this chart? The aussie is now closing in on 0.7500, which could act as a psychological barrier to limit short-term gains. But beyond that, it is hard to see this stopping until it potentially hits 0.8000 in the long-term.
The market narrative is slowly focusing more and more on the transition from the virus crisis peaking and vaccine optimism growing, and that builds a strong platform for risk trades to thrive - not to mention prolonged easy monetary policy.
One downside is that the RBA may be keeping aussie rates pinned lower for a longer period of time. However, the fact that they are starting to potentially steer clear of negative rates is another boost for the currency at least.
Adding to that is the larger theme of more protracted dollar weakness that could follow in the coming year(s). Then again, that may be the market narrative now but it could all change depending on what happens over the next few months.
In the meantime, it is futile to fight the trend. AUD/JPY is also extending to its highest levels since September. Be wary of a potential test of the 31 August high @ 78.46:
