AUD/USD consolidates RBA-inspired gains, trades above 0.6700
- RBA left its policy rate unchanged at 0.75% as expected.
- Bushfires and coronavirus don't seem to be causing RBA to change its stance.
- Broad USD strength keeps pair's upside capped on Tuesday.
The AUD/USD pair gained traction during the Asian trading hours and climbed to a daily high of 0.6733 boosted by the Reserve Bank of Australia's monetary policy statement. With the greenback preserving its strength, the pair eased from its highs and was last seen trading at 0.6705, adding 0.22% on a daily basis.
RBA helps AUD outperform its rivals
As expected, the Reserve Bank of Australia (RBA) decided to keep its policy rate unchanged at 0.75%. In its policy statement, the RBA downplayed the potential negative impact of the coronavirus outbreak and bushfires on Australia's economy and refrained from changing its language on the interest rate outlook.
Commenting on the RBA's statement, "it seems highly likely to us that the RBA’s perhaps understandably cautious assessment of these risks is about to be overtaken by “events, dear boy, events”, to steal a phrase attributed to the former British Prime Minister, Harold Macmillan," said David Plank, Head of Australian Economics at Australia and New Zealand Banking Group (ANZ). "The question is when this will become clear.”
On the other hand, the US Dollar Index is clinging to modest daily gains near 97.90 ahead of mid-tier data releases from the US and makes it difficult for the pair to stretch higher.
During the Asian trading hours, Commonwealth Bank's Services and Manufacturing PMI data from Australia will be looked upon for fresh impetus. More importantly, RBA Governor Lowe will be delivering his remarks on the policy outlook at 0130 GMT.
Technical levels to watch for