AUD/USD jumps 35 pips as RBA keeps tapering on the table

  • AUD/USD rises nearly 30 pips after the RBA’s hawkish announcement.
  • RBA says to continue with tapering of bond-buying program after early September.
  • Market sentiment dwindles amid mixed clues concerning covid and stimulus.
  • US Treasury yields pause after the lowest daily closing since February, stock futures print mild gains.

AUD/USD takes the bids around 0.7396, up 0.40% intraday, ahead of Tuesday’s European session. The Aussie pair reacts to the Reserve Bank of Australia’s (RBA) hawkish tilt of late.

The RBA matched wide market forecasts of announcing no change in the benchmark interest rate and bond purchases. However, its readiness to keep the September tapering plan on the table lured the bulls as the latest local lockdowns in Australia pushed market players to anticipate a bearish tone from the RBA.

Read: Breaking: RBA leaves OCR unchanged at 0.10% in August, AUD/USD jumps to 0.7400

It’s worth noting that the AUD/USD prices remained sidelined ahead of the RBA amid cautious sentiment. In doing so, the Aussie pair ignored Moody’s upbeat expectations of firmer Asia-Pacific recovery off the pandemic as well as the International Monetary Fund’s (IMF) historical allocation of $650 billion to its Special Drawing Rights (SDRs).

Additionally, the second day of reduction in the national new covid infections in Australia also failed to impress the pair buyers of late. New South Wales marks the second day of softer virus numbers, with the latest being around 200, taking the Aussie total down to 223. Furthermore, global rating giant Moody’s recently said, per Reuters, “Asia-Pacific’s economic activity likely will rebound strongly in 2021 and 2022 as compared with recent performance.”

While the challenging the bulls were fears from the US Centers for Disease Control and Prevention (CDC) terming Delta variant of the virus as “likely more severe” than earlier versions, per Reuters. Furthermore, downbeat prints of the US and Chinese PMIs, as well as Aussie housing data, published earlier in Asia, also tried to tame the corrective pullback.

It’s worth noting that the US Dollar Index (DXY) remains indecisive around 92.00, ignoring steady US 10-year Treasury yields after posting the lowest daily closing since February. However, a 0.18% intraday gain of the S&P 500 Futures, despite a downbeat week-start on Wall Street, portrays the market’s mild optimism.

Having witnessed the initial reaction to the RBA’s monetary policy announcement, the AUD/USD traders will keep their eyes on the risk catalyst for fresh impulse amid a light calendar elsewhere.

Technical analysis

AUD/USD remains short-term bearish below 0.7410-15 area, including early July lows and last week’s swing high, while a trend change can only be expected on a daily closing beyond 200-DMA near 0.7600. On the contrary, 0.7340 support confluence, comprising weekly rising trend line and highs marked during September–November 2020 probe intraday sellers ahead of directing them to the yearly low of 0.7288.

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