Optimistic RBA helps push AUD through 0.74 US cents
|AUD - Australian Dollar
The Australian dollar advanced through trade on Tuesday, testing 0.74 US cents as global equities pushed higher and the RBA maintained a largely hawkish outlook. Central Bank policymakers surprised investors in sticking to the planned tapering of bond purchases, despite the challenges presented by the latest COVID-19 outbreak and rolling lockdown across Sydney. Markets had expected the RBA would delay an adjustment to the QE program as it assessed the impact of lockdowns; instead, the RBA remains largely optimistic the economy will bounce back quickly, as has been the case in previous outbreaks. A sanguine outlook coupled with expectations for a rise in underlying inflation, and the AUD was helped off lows at 0.7360 to touch 0.7405. While the AUD has bounced off lows below 0.73 US cents, resistance on moves above 0.7370/0.7400 remains firmly intact for now. A consolidated break above these handles could signal a broader AUD recovery, and our attentions turn now to leading US employment data. The ISM services index and ADP employment print could provide a valuable insight into Friday’s Non-farm payroll report.
Key Movers
Price Action across major currencies was largely muted through trade on Tuesday, with the AUD and NZD the only real movers on the day. While global equities pushed higher amid solid earnings reports and sustained low interest rates, ongoing concerns surrounding the global spread of the Delta variant continue to weigh on investors, dampening hopes the global economy will make a full recovery by the end of 2021. With the Delta strain spreading rapidly throughout the world, the threat of new restrictions threatens to derail the recovery to date. China’s growing outbreak has prompted the introduction of travel restrictions across Beijing, prompting a steep drop off in oil prices and expectations for a downturn in demand for raw material as the world’s second-largest economy grinds to a halt. Fears the outbreak in China will only exacerbate recent supply led inflation pressures have prompted analysts to update expectations for central bank policy action. Our attentions today turn to leading US employment data and ongoing developments in the Pandemic as key markers for short and medium term currency direction.
Expected Ranges
AUD/USD: 0.7320 - 0.7450 ▲
AUD/EUR: 0.6180 - 0.6360 ▲
GBP/AUD: 1.8580 - 1.8920 ▼
AUD/NZD: 1.0480 - 1.0580 ▼
AUD/CAD: 0.9180 - 0.9320 ▲
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