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  • AUD/USD continues to trade in the green despite RBA’s dismal 2020 growth forecast. 
  • Governor Lowe had already informed markets about the impending economic downturn. 
  • Risk is buoyed in Asia and keeping the AUD better bid. 

The bid tone around the Aussie dollar remains intact, keeping the AUD/USD at session highs above 0.6520 even though the Reserve Bank ofAustralia’s quarterly Statement of Monetary Policy (SoMP) released soon before press time warned of an economic contraction in 2020. 

Australia’s gross domestic product is expected to contract by 6% in 2020 and the policymakers expect the growth rate to rise back to 6% in 2021, according to the SoMP.  The RBA will also not raise cash rate ahead of the progress being made on its employment and inflation targets, the SOMP said. 

As markets were already informed by Governor Lowe about the RBA’s base case for a rise in the jobless rate to 10% by June and a 10% drop in the output in the second quarter, the dismal 2020 growth forecast carried by the latest SoMP is not having any impact on the Aussie dollar. 

Moreover, risk assets are flashing green in Asia and helping the AUD stay better bid. For instance, the futures on the S&P 500 are up 0.80% and the anti-risk Japanese yen and US dollar are reporting losses. 

Traders are buying into risk in Asia, pushing growth-linked Aussie dollar higher, possibly due to the news that US and Chinese diplomats are planning to re-establish trade-talks beginning next week and Saudi Arabia would be raising its oil prices in a bid to stabilize globe crude and financial markets.

The AUD/USD pair could rise above the 100-day average at 0.6539 during the day if the risk-on environment persists. The American dollar will likely stay on the defensive with interest rate markets moved to price in the possibility of negative interest rates from the US Federal Reserve within the next 2 years.

Technical levels