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    AUD/USD inter-market: rallies in sync with copper, will it sustain on Fed/ Aus jobs? Dhwani Mehta

    The overnight recovery in the AUD/USD pair gathered steam post-European open this Wednesday after a fresh risk-on wave gripped the markets amid higher commodities’ prices and European stocks relief rally.Some market participants believe that it’s solely a short-covering rally in the Aussie, after the rate hit almost one-week lows a day before, as focus now turns towards the Fed statement and Australian jobs report lined up for release in the upcoming hours.However, I beg to differ here, as looking at the intrinsic valuations, it can be easily noted that the latest rebound in the major is largely backed by a rally in the copper prices along with a drop in the VX (fear gauge) and AUD-favoured yield differentials.Copper prices rockets 2.60% to trade near fresh six-day tops reached at 2.099 levels, rebounding sharply from 2.038. While VIX index (S&P VIX futures), a fear barometer, drops -2.40%, suggesting resurgence of risk appetite into markets, which favours higher-yielding currencies such as the Aussie.Looking ahead, markets should closely track the price-action in copper as well as the yield spread in order to gauge next direction on the Aussie. However, wild swings on the announcement of Fed decision and Aus employment data cannot be ruled out, as such events usually trigger massive volatility across the financial markets.

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