AUD/USD surges 60+ pips as RBA refrains from a rate-cut

• RBA leaves the benchmark cash rate unchanged at 1.5% expecting downside risk to the economy.
• Quarterly RBA statement will be closely observed for further details.

The AUD/USD pair is on the bids near 0.7040 as the Reserve Bank of Australia (RBA) announced no change in its monetary policy on early Tuesday.

The Australian central bank left benchmark cash at hold near 1.5%, beating general market expectations of a 25 basis point cut. Though, downside risks to the economy and concern over slowing growth international trade have been noted down.

On the data front, March month retail sales and trade balance from Australia flashed overall positive figures to trigger the Aussie pullback from earlier declines led by pessimism concerning the looming tariffs on China.

The seasonally adjusted retail sales grew more than 0.2% forecast to +0.3% versus upwardly revised +0.9% prior while trade balance grew 4,949 million compared to 4,300 million forecast and 5,141 million (revised) earlier. Also, exports shrank -2.0% against +5.0% prior and imports dropped -2.0% vis-à-vis -0.7% marked last-month.

Aussie is also considered as the market’s risk barometer but has recently deviated from another such indicator, namely the US 10-year treasury yields, which shed nearly 2.5 basis points to 2.475% off-late.

Looking forward, developments surrounding the US-China trade deal could take the front seat in directing near-term Aussie moves while March month JOLTS job openings may offer additional information. The employment data could rise to 7.240 million from 7.087 million previous.

Additionally, Friday’s quarterly RBA rate statement will be also be closely observed to witness how economic forecasts are being changed considering the same monetary policy.

Technical Analysis

Sustained break of 0.6970 can fetch the quote to 0.6920 and the year 2016 bottom near 0.6820 whereas January’s flash crash bottom near 0.6730 could gain market attention then after.

On the upside, 0.7030 and 0.7055 seem nearby resistances prior to expecting the rise towards 0.7070 and 50-day simple moving average (SMA) level around 0.7090.