Australian Dollar Appreciates Amid Rising Risk Appetite

The Australian dollar climbed against its major counterparts in the Asian session on Monday amid rising risk appetite, as oil prices rebounded from a sell-off last week and on expectations that the Federal Reserve may delay its QE tapering plans due to the spread of the Delta variant.

Investors cheered comments from Dallas Fed President Robert Kaplan, who told Fox Business Network last week that he might adjust his views about the plan for an early tapering of the bond purchase program.

China reported zero new infections for first time since July, helping ease fears over the current outbreak.

Australian Prime Minister Scott Morrison said that he is planning to ease strict COVID-19 restrictions when vaccination rates rise as it is "highly unlikely" to ever return to 'COVID-zero'.

Survey from Markit Economics showed that Australia's manufacturing sector continued to expand in August, albeit at a much slower rate, with a 14-month low manufacturing PMI score of 51.7.

That's down from 56.9 in July, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

The aussie climbed to 4-day highs of 0.7165 against the greenback and 78.75 against the yen, off its prior lows of 0.7119 and 78.13, respectively. The next possible resistance for the aussie is seen around 0.75 versus the greenback and 80.00 against the yen.

The aussie recovered to 1.6353 against the euro and 1.0472 against the kiwi, up from its early low of 1.6413 and a 6-day low of 1.0420, respectively. If the aussie continues its rise, 1.60 and 1.06 are possibly seen as its next resistance levels against the euro and the kiwi, respectively.

The safe-haven yen fell amid improved risk sentiment.

The yen weakened to 4-day lows of 109.99 against the greenback, 150.24 against the pound, 86.21 against the loonie and 75.32 versus the kiwi, after rising to 109.62, 149.27, 85.43 and 74.82, respectively in early deals. The yen is seen finding support around 111.00 against the greenback, 153.00 against the pound, 88.00 against the loonie and 78.00 versus the kiwi.

The yen declined to a 5-day low of 128.87 against the euro and a 2-week low 120.22 against the franc, following its prior highs of 128.28 and 119.57, respectively. The yen is likely to find support around 131.5 against the euro and 123.00 against the franc.

Looking ahead, PMI report from the U.K. will be published in the European session.

Eurozone flash consumer sentiment index for August will be featured at 10:00 am ET.

U.S. existing home sales for July are due at the same time.