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  • AUD/USD rises back to the 0.7750 area, on the back of risk appetite.
  • RBA policy meeting on Tuesday: no change expected, eyes on statement and QE.

The AUD/USD rose further during the American session, and as of writing, it trades at 0.7780, at fresh daily highs. The improvement in market sentiment boosted further the Aussie that is the top perform among G10 currencies.

The pair is recovering after falling sharply on Friday to 0.7690, the lowest level two weeks. Lower US yields, higher equity prices (Dow Jones +2.20% and Nasdaq +2.30%) contribute to the recovery in commodity currencies.

RBA to release policy statement

On Tuesday, the Reserve Bank of Australia (RBA) will have its meeting. On Monday, the central bank announced an increase in the amounts and maturities of its purchase program in an effort to strengthen its control of the yield curve.

“The RBA is clearly pushing back harder at the continued rise in interest rates.  However, it could outline its plan more forcefully by officially targeting longer maturities beyond 3-year bonds currently.  The RBA will likely pledge stronger action to maintain YCC and promise to increase QE as needed in the coming months”, explained analysts at BBH.

No change in rates is expected from the RBA. Some volatility around the announcement seems granted. The statement is due at 03:30 GMT on Tuesday; before that, the Building Permits for January and the Current Account Balance for Q4 are due.

In the US, the PMI and ISM Manufacturing indices readings for January came in above expectations. The key report of the week will be the Non-farm payroll on Friday.

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