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  • US Final Markit Manufacturing PMI is expected to stay below 50.
  • Reserve Bank of Australia’s upbeat tone boosts AUD.
  • US Dollar Index stays close to multi-year highs near 98.30.

The AUD/USD pair dipped below the 0.67 mark during the early trading hours of the Asian session but staged a decisive recovery on the back of Reserve Bank of Australia’s (RBA) upbeat tone. As of writing, the pair was up 0.27% on the day at 0.6730.

RBA keeps policy unchanged as expected

Although the RBA left its policy rate unchanged at 1% and in its monetary policy report said that the bank was standing ready to ease the policy if needed to support sustainable growth, the bank also added that looking forward,  growth in Australia was expected to strengthen gradually. “The outlook is supported by low-interest rates, tax cuts, infra spending, house price revival, strong resource sector,” the RBA noted.

Assessing the RBA statement,  “General commentary in the decision statement is very similar to the August decision statement. The most important changes are to be somewhat guarded on housing markets, “further signs of a turnaround in established housing markets”, but to also point out that construction activity has weakened,” said Westpac analysts.

On the other hand, the US Dollar Index, which tracks the dollar’s value against a basket of six major currencies is sitting at its highest level since May 2017 near 98.30, capping the pair’s upside for the time being.

The IHS Markit and the ISM will be both releasing their August PMI reports later in the session. Toward the end of the American session, Boston Fed President Rosengren is scheduled to deliver a speech as well.

Technical levels to watch for