AUD/USD charts 90-pip bounce as RBA cuts rates as expected
|- AUD/USD jumps 90 pips as RBA met dovish expectations.
- The central bank cut rates by 25 basis points and announced a bond purchase program.
- Australia's 10-year yield surged after the rate cut decision.
AUD/USD pair added 90 pips and recovered to 0.5633 after the Reserve Bank of Australia cut rates by 25 basis points to a new record low of 0.25%, as expected.
The central bank also announced a government bond purchase program, which is will commence from Friday. The bank will be buying bonds in the secondary market.
With coronavirus pandemic threatening to push both the global and Australian economy into recession, the RBA was widely expected to hit the zero lower bound and start a bond purchase program to pump liquidity into the system.
The dovish move was priced in advance, as evidence from AUD/USD's slide from the high of 0.6685 seen on March 3 to lows near 0.545 seen ahead of the central bank's decision.
As a result, the Aussie dollar has bounced, possibly on "buy the fact" trade and could continue to gain altitude during the day ahead, more so, as Australia's 10-year government bond yield surged by over 100 basis points in the last few minutes. At press time, the pair is trading near 0.5580, still down over 3% on the day.
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.