AUD/USD whipsaws around weekly top above 0.7550 on RBA’s inaction
- AUD/USD wobbles around intraday/weekly high as RBA keeps monetary policy intact, hints QE extension.
- DXY ignores Treasury yiled rebound to print three-day downtrend.
- Covid woes stay intact, Epsilon adds to the virus-led pessimism.
- RBA’s Lowe needs to justify the latest moves to defend the bulls.
AUD/USD pays a little heed to widely anticipated RBA inaction, despite easing from the recent top to 0.7560, up 0.46% intraday, during early Tuesday. In doing so, the Aussie pair cheers broad US dollar weakness.
The Reserve Bank of Australia (RBA) poured cold water on the face of expectations that the Aussie central bank will tease the monetary policy consolidation during the July meeting. That said, RBA left the benchmark interest rate unchanged at 0.10% while also keeping the three-year bond yield target steady. The central bank also signaled fresh bond purchase plans.
Read: RBA keeps rates steady at 0.10% in July, plans third round of QE
Australia’s coronavirus (COVID-19) conditions play a major role in the RBA’s latest action as the Oz nation struggles with the covid variant outbreak. While the latest new cases eased to 29 from 44 so far during July 06, per ABC News, numbers remain grim in Sydney, Queensland and New South Wales.
The latest addition to the virus woes is the strain that resists vaccine and becomes a major threat if spreads faster outside the origin California, named Epsilon.
Elsewhere, market sentiment remains divided over the Fed’s next moves following Friday’s mixed data employment comprising an uptick in the headlines Nonfarm Payrolls (NFP) in contrast to the firmer Unemployment Rate. Hence, today’s US ISM Services PMI for June, expected 63.5 versus 64.0 prior, will be watched closely for inflation component ahead of the FOMC minutes to confirm the divide among the Fed policymakers and recall the US dollar bulls.
On an immediate basis, AUD/USD traders are more interested in comments from RBA Governor Lowe to know the reason behind the latest moves. Should the central banker sounds grim, the quote may register a pullback but the US data will be the key afterward.
Read: ISM Services PMI Preview: Why the inflation component could trigger a dollar rebound
Technical analysis
A sustained break of monthly resistance line, now support, keeps AUD/USD buyers hopeful to regain the controls. In doing so, 200-DMA near 0.7575 acts as the key hurdle.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
