Australian Dollar Rallies As EU Stimulus Package, Vaccine Hopes Lift Stocks

The Australian dollar climbed against its major rivals in the Asian session on Tuesday amid risk appetite, as European Union leaders agreed on recovery package and news from Pfizer and German company BioNTech raised expectation for a potential coronavirus vaccine.

The €750 billion package is aimed to help the bloc's countries worst affected by the coronavirus crisis.

The emergency fund consists of 390 billion euros of grants and 360 billion euros of low-interest loans.

EU officials also reached deal on the bloc's 2021-27 budget worth about €1.1 trillion.

Pfizer and German biotech firm BioNTech announced positive results on a potential coronavirus vaccine in an early trial.

Separately, AstraZeneca, which is developing a cornoavirus vaccine in partnership with the University of Oxford, said that its vaccine showed promising immune response in the more than 1,000 patients involved in the phase 1 and phase 2 trials.

In economic news, members of the Reserve Bank of Australia's monetary policy board acknowledged that the country's current economic struggles are its most severe downturn since the Great Depression of the 1930s, minutes from the central bank's July 7 meeting has revealed.

The members added that the economic downturn was not restricted to just Australia, as the whole world attempted to grapple with the aftermath of the COVID-19 pandemic.

The aussie firmed to 1-1/2-month highs of 0.7053 against the greenback and 75.67 against the yen, after falling to 0.7011 and 75.13, respectively in previous deals. The aussie may locate resistance around 0.73 against the greenback and 78.00 against the yen.

Reversing from its early lows of 1.0659 against the kiwi and 1.6325 against the euro, the aussie spiked up to a 3-week high of 1.0716 and an 8-day high of 1.6252, respectively. If the aussie extends its rally, 1.09 and 1.58 are likely seen as its next resistance levels against the kiwi and the euro, respectively.

The aussie rose to a 6-day high of 0.9518 against the loonie, from a low of 0.9481 seen at 12:00 am ET. Further rise in the aussie may see resistance around the 0.98 area.

Looking ahead, Canada retail sales for May and new housing price index for June are due in the New York session.