- AUD/USD pays a little heed to the RBA’s monetary policy decision.
- RBA keeps benchmark interest rate, three-year yield target unchanged.
- Trading sentiment stays upbeat amid hopes of US stimulus, vaccine expectations.
- US aid package news, virus/vaccine updates will be the key.
AUD/USD keeps mild gains while taking rounds to 0.7360 after RBA monetary policy decision on early Tuesday. In doing so, the aussie pair cheer broad risk-on mood as well as the US dollar weakness.
RBA matched wide expectations while keeping the interest rate unchanged at 0.10%. While checking the details, the rate statement said, “The Board will keep the size of the bond purchase program under review, particularly in light of the evolving outlook for jobs and inflation.”
Read: RBA leaves monetary policy settings unchanged, as expected
Risks cheer nearness to the US covid stimulus, as indicated by Fed Chair Jerome Powell and US Treasury Secretary Steve Mnuchin in their prepared remarks for today’s testimony. While Fed’s Powell identified moderating economic growth as a risk that needs an economic push, Treasury Secretary Mnuchin directly urged Congress to use $455 billion from CARES Act to provide the much-needed relief.
Elsewhere, upbeat prints of China’s November month Caixin Manufacturing PMI and hopes of welcome growth figures for the Q4 GDP, expected 6.6% QoQ, also favored the AUD/USD buyers as Beijing is the largest customer of Canberra. Even so, the bulls have been hesitant as China recently turned anti-trade for the Scott Morrison-led government’s decision to back inquiry of the COVID-19 root and outbreak.
It should also be noted that Moderna’s readiness to apply for the emergency usage of its virus vaccine to the US Food and Drug Administration (FDA) also favors the risk-on mood. As a result, stocks in Asia-Pacific join the US 10-year Treasury yields to portray the market optimism.
Moving on, news over the virus and vaccine developments will accompany testimonies by Fed’s Powell and Treasury Secretary Mnuchin for further direction. Additionally, US ISM Manufacturing PMI and updates on the Western tussle with China can add filters to the moves.
Technical analysis
AUD/USD bounce off 0.7345/40 support-zone, comprising highs marked between mid-September and November 17, keeps the pair directed towards the 0.7400 round-figure. Also acting as nearby support is an upward sloping trend line from November 13, at 0.7310 now.
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