AUD/USD sees little action as RBA’s minutes offer no surprises

• RBA continues to trade largely unchanged on the day near 0.6530. 
• RBA’s minutes showed the policymakers are on a wait-and-watch mode. 
• The central bank did not buy bonds in the week ended May 11.
• Trade tensions are keeping the AUD bulls at bay on Tuesday.

AUD/USD is barely moving in response to the Reserve Bank of Australia’s April meeting minutes released at 01:30 GMT. 

“Members assessed that the best course is to monitor the economy, financial outcomes. Bank’s policy package was working broadly as expected,” the minutes showed. Further, the minutes revealed that the board was prepared to scale up bond purchases if necessary and was in favor of the yield curve control target until credible progress is made on the jobs and inflation front. 

While the bank remains committed to expanding bond purchases, if needed, it has winded things down of late. The central bank opted to forgo any bond purchases in the week of May 11 and sat on the sidelines, possibly because the three-year bond yield target of 0.25%. Further, the syndication of the new December 2030 bond was strong, suggesting the bond market is functioning well, as noted by Australia New Zealand Bank’s (ANZ) research desk. 

That makes the RBA relatively hawkish than its other G-10 counterparts. The AUD, therefore, has an edge over other major currencies. 

At press time, AUD/USD is trading around 0.6530, representing marginal gains on the day, having hit a high of 0.6552 a few minutes ago. While the overnight gains on Wall Street are providing positive lead, the AUD is struggling to extend Monday’s rally, possibly due to the escalating tensions between China and Australia. 

The latter has slapped tariffs on Australia’s drought-affected barley exporters, reportedly as a payback to Australia for pushing for a coronavirus probe. 

Technical levels