Forex Market: AUD/USD hits a 12-week high as transition to a Biden cabinet begins, Janet Yellen may be nominated for Treasury Secretary

AUD/USD, along with other risk-sensitive assets, surged almost 1% on Tuesday and hit highs not seen since early September, after US President Donald Trump agreed to begin a transition to a government led by President-elect Joe Biden.

It also became clear that former Federal Reserve Chair Janet Yellen would probably be nominated to become Treasury Secretary, which fueled optimism among market players, as she has spoken in favor of increased government spending to help economy recover from the pandemic-induced recession.

“That should be a positive appointment from the market’s point of view, as she is expected to pursue conventional policies,” Commerzbank strategists wrote in an investor note.

“And as far as the fiscal package is concerned, she is likely to listen to the Fed’s demands and try and push a package as much as possible.”

Yellen would become the first person to lead the Treasury Department, the Federal Reserve and the White House Council of Economic Advisers.

As of 11:00 GMT on Tuesday AUD/USD was gaining 0.86% to trade at 0.7349, after earlier touching an intraday high of 0.7368, or a level not seen since September 2nd (0.7382). The major pair has risen 4.73% so far in November, following a 1.87% slump in October.

In terms of US macroeconomic data, today market players will be paying attention to the monthly report on consumer confidence for November due out at 15:00 GMT.

Additionally, several Federal Reserve officials are expected to make speeches.

Bond Yield Spread

The spread between 2-year Australian and 2-year US bond yields, which reflects the flow of funds in a short term, equaled -6.2 basis points (-0.062%) as of 9:15 GMT on Tuesday, up from -6.4 basis points on November 23rd.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 0.7296
R1 – 0.7327
R2 – 0.7368
R3 – 0.7399
R4 – 0.7430

S1 – 0.7255
S2 – 0.7224
S3 – 0.7183
S4 – 0.7142