RBA policy meeting offers little incentive to break current trading range

AUD - Australian Dollar

The Australian dollar crept through 0.7750 on Tuesday, moving marginally higher on the day in what was otherwise a largely lacklustre trading session. Price action across majors was muted despite a deluge of macroeconomic indicators and uptick in key commodity prices. Analysts largely ignored the RBA’s rate statement after officials unsurprisingly left rates on hold and failed to offer any insight into amendments in the current quantitative easing program. While edits to the RBA’s rhetoric were mostly positive, investors appeared reluctant in extending gains beyond resistance at 0.7770 ahead of a key macroeconomic data prints. The Australian dollar remains firmly range bound and unlikely to shift outside the current handle without a significant shift in the underlying risk narrative. Our attentions turn to today’s quarterly GDP print and Friday’s US non-farm payroll data as key markers of direction into the weekend. Anything short of a shock under or over performance is unlikely to prompt a significant shift in direction.

Key Movers

Price action across currency markets was largely muted on Tuesday, with the USD, EUR and JPY all flat. The GBP was the days big underperformer, giving up 1.42 and slipping below 1.4150. Despite the UK’s best efforts to vaccinate its citizenry as quickly as possible and a slow and measured economic re-opening, the introduction of the Indian variant has sparked a fresh wave of infections across some regions sparking fears the government will be forced to slow and even roll back the plan to re-open the economy. The UK has led most countries in delivering a fast and effective vaccination program and the emergence of variants raises significant near-term concerns. Our attentions, as always, remain with the evolving pandemic while commentary from Bank of England Governor Bailey headlines the macroeconomic ticket.

Expected Ranges

AUD/USD: 0.7680 - 0.7830 ▲

AUD/EUR: 0.6290 - 0.6370 ▲

GBP/AUD: 1.8180 - 1.8420 ▼

AUD/NZD: 1.0630 - 1.0750 ▲

AUD/CAD: 0.9290 - 0.9410 ▲