AUD/USD inches higher toward 0.68 despite decisive USD recovery
|- RBA voices willingness to adjust policy to support growth.
- US Dollar Index starts correcting three-day slump on Tuesday.
- Yuan recovery helps antipodeans gather strength against major rivals.
After coming within a touching distance of the January flash crash low of 0.6744 earlier in the day, the AUD/USD pair staged a recovery and is now inching close to the 0.68 handle. As of writing, the pair was up 0.46% on the day at 0.6787.
RBA and yuan appreciation help AUD
Earlier today, the strong jump witnessed in the positively-correlated NZD/USD pair on the back of upbeat employment data from New Zealand helped the AUD/USD pair gain traction. Moreover, China took steps to limit the yuan weakness, easing fears over a currency war with the United States and helping antipodeans find demand.
Additionally, following two straight rate cuts, the Reserve Bank of Australia in its policy statement adopted a relatively neutral tone provide an additional boost to the Aussie. The RBA said the outlook for the global economy remained "reasonable," but added that they would adjust the policy if needed to support sustainable economic growth.
Assessing the RBA's statement, "In its accompanying policy statement, the RBA retained its fairly neutral stance from the July edition," TD Securities analysts said. "Taken as a whole, a rate cut remains on the table for an upcoming meeting, but policymakers do not appear to be in a great hurry to deliver one imminently.”
On the other hand, following an intense selloff that lasted for three trading days, the dollar is finally retracing its losses against its major rivals with the US Dollar Index rising toward 97.70 and limiting the pair's upside for the time being.
In the early trading hours of the Asian session on Wednesday, Home Loans and Investment Lending for Homes data from Australia will be looked upon for fresh impetus.
Technical levels to consider
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