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AUD/USD recovers earlier losses to pierce 0.5800 amid RBA’s latest move

  • AUD/USD bounces off the early-day lows.
  • The RBA announced details of the first round of QE.
  • Chinese coronavirus updates have been positive off-late, the western world suffers from the pandemic.
  • The US stimulus is in the pipeline while the economic calendar offers no major data/event except for PBOC.

Not only receding coronavirus (COVID-19) cases from China but the RBA’s latest bond-buying also strengthened AUD/USD to take the bids around 0.5800, up 1.0%, amid Friday’s Asian session. In doing so, the pair reverses the earlier losses of around 1.0%, which in turn marks a near 2.0% rally in a short time.

The RBA will buy up to A$5 billion of government bonds in the first round of Quantitative Easing (QE). The Aussie central bank also said that the bond maturities will be between two and eight years. The news marked yet another effort from the RBA after it announced rate cut and QE the previous day. The news restores the Aussie buyers’ confidence in Australian combat against the epidemic.

Earlier helping the pair were the latest updates from Hubei and mainland China that suggested the epicenter registers no fresh cases f the deadly disease for one more day while all three cases in China are imported.

On the other hand, the New York Mayor cited fears of medical supply shortage whereas the Fed showed readiness to announce the much-awaited relief package of nearly $1.3 trillion on Monday.

It should also be noted that Bloomberg mentioned that the distressed debt in the US doubled to 500 billion in a week.

The trade sentiment remains mixed with the US 10-year treasury yields rising three basis points (bps) to 1.158% while the stock futures marking losses of more than 1.0% by the press time.

While the People's Bank of China (PBOC) is anticipated to cut the one-year loan prime rate (LPR), its benchmark, to 4% from the current 4.05% at 01:30 GMT on Friday, headlines relating to the coronavirus will keep the driver’s seat.

Technical Analysis

Short-term buyers may aim for 0.5960 as the key resistance while the pair’s declines below 0.5660 can recall 0.5500.

 

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