AUD/USD rallies 30+ pips following no change in RBA Interest Rate
- AUD/USD extends recovery from multi-month lows.
- Global equities, bonds portray risk reset despite spreading coronavirus contagion.
- Second-tier data from the US can offer intermediate moves, risk catalysts to direct broad moves.
AUD/USD takes the bids to 0.6711 after the RBA leaves its benchmark interest rates unchanged during early Tuesday. The pair previously dropped amid fears of coronavirus outbreak.
RBA matches wide expectations…
The Reserve Bank of Australia (RBA) matched the most consensus while keeping the benchmark interest rate at 0.75%. In doing so, the RBA leaves the door open for further monetary policy actions, if needed.
Read: Breaking: AUD/USD tests 0.6700 after RBA leaves rate unchanged at 0.75%
The Aussie central bank considered Bushfires, coronavirus as temporary burdens on the economy while also saying that it's too early to determine how long-lasting the impact from coronavirus will be.
Read: RBA: Bushfires, coronavirus will temporarily weigh on growth
Risk reset under process…
Although increasing numbers of coronavirus victims have been a cause of concern, the Chinese press follows the World Health Organization’s (WHO) footsteps to placate traders. Also, earlier comments from Chinese President Xi Jinping and the active performance of diplomats in Beijing, to tame the short-selling on the first day of trading, might also have contributed to risk reset.
While portraying the same, the Asian equities have started posting gains while the US 10-year treasury yields and S&P 500 Futures also flash green signals by the press time.
Even so, statements from China are raising concerns over the phase-two trade talks between the US and Beijing. The world’s top two economies might have to meet and discuss possible alterations to their phase-one deal as the current coronavirus affects China’s performance on terms.
Having learned the RBA’s interest rate decision, markets will now keep eyes on Friday’s RBA monetary policy statement and Governor Philip Lowe’s speech for further details. In the meantime, second-tier economics from the US, relating to employment and PMIs, could entertain traders. It should also be noted that any updates concerning China’s coronavirus will be taken seriously for fresh direction.
Technical Analysis
October 2019 bottom around 0.6670 holds the keys to pair’s further downside towards 0.6635 and then to 0.6600 round-figure. On the flip side, November month low near 0.6755 can keep the short-term pullbacks limited.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
