AUD/USD spikes to 0.7600 neighbourhood after RBA Governor Lowe’s comments


  • A combination of factors assisted AUD/USD to build on its recent bounce from YTD lows.
  • Diminishing odds for an earlier Fed rate hike weighed on the USD and remained supportive.
  • The strong intraday buying picked up pace following the RBA Governor Lowe’s comments.

The AUD/USD pair jumped to over one-week tops in reaction to the RBA Governor Phillip Lowe's comments, with bulls now awaiting a sustained move beyond the 0.7600 mark.

Following the previous day's subdued/range-bound price action, the AUD/USD pair caught some aggressive bids on Tuesday and built on its post-NFP strong bounce from seven-month lows. This marked the third consecutive day of a positive move and was sponsored by a combination of factors.

An unexpected rise in the US unemployment rate overshadowed the big beat on the headline NFP print and eased market fears about an earlier than anticipated policy tightening by the Fed. This, in turn, acted as a headwind for the US dollar and extended some support to the AUD/USD pair.

The buying interest picked up pace after the RBA Governor Phillip Lowe – during the post-meeting press conference – said that the condition for a lift in the cash rate relates to inflation, not wages. Focus on wages does not mean we have a target for wages growth or that wages growth necessarily has to have cleared a specific benchmark before we adjust interest rates, Lowe added further.

Earlier the Australian central bank left the benchmark interest rate and the three-year bond yield target unchanged at 0.10%. The RBA also reduced the rate of purchases from A$5 billion to A$4 billion per week until 11 November 2021, though said that the step down is not a representation of withdrawal of support.

As investors assess the RBA's monetary policy stance, bulls took a brief pause near the 0.7600 mark. This is followed by the recent swing highs, around the 0.7615 region, which if cleared decisively will set the stage for a further near-term appreciating move. The AUD/USD pair might then aim to test the next relevant hurdle near the 0.7650-60 supply zone.

Market participants now look forward to the US economic docket, highlighting the release of the ISM Services PMI later during the early North American session. The data might influence the USD price dynamics and produce some short-term trading opportunities. The key focus, however, will remain on the FOMC meeting minutes, due for release on Wednesday.

Technical levels to watch

AUD/USD

Overview
Today last price 0.7591
Today Daily Change 0.0062
Today Daily Change % 0.82
Today daily open 0.7529
 
Trends
Daily SMA20 0.7595
Daily SMA50 0.7692
Daily SMA100 0.7707
Daily SMA200 0.7574
 
Levels
Previous Daily High 0.7538
Previous Daily Low 0.7508
Previous Weekly High 0.7603
Previous Weekly Low 0.7445
Previous Monthly High 0.7794
Previous Monthly Low 0.7477
Daily Fibonacci 38.2% 0.7527
Daily Fibonacci 61.8% 0.7519
Daily Pivot Point S1 0.7512
Daily Pivot Point S2 0.7495
Daily Pivot Point S3 0.7482
Daily Pivot Point R1 0.7542
Daily Pivot Point R2 0.7555
Daily Pivot Point R3 0.7572

 

 

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