AUD/USD stays bid above 0.7000 after RBA minutes, Governor Lowe in focus
- AUD/USD extends pullback from 0.7030 as RBA policymakers defy need to adjust monetary policy measures considerin the virus conditions.
- Market sentiment remains mildly bid as European leader inch closer to 750 billion Euros of aid package.
- Victoria keeps pandemic numbers past-300 for seventh day in a raw, US data suggest weakness in new cases.
- RBA Governor Lowe’s Speech, US data and vaccine updates can offer intermediate moves other than the EU summit.
AUD/USD rises to 0.7033, up 0.20% on a day, during the early Tuesday. The pair recently benefited from upbeat RBA mintues while carrying the previous day’s optimism. Traders now await comments from the RBA Governor Philip Lowe for immediate direction.
Minutes of the latest RBA monetary policy said, “Members agreed that there was no need to adjust the package of measures in Australia in the current environment.” This defies the earlier hopes that the policymakers are worries about the second wave of the coronavirus (COVID-19).
Read: RBA Minutes: Target for three-year yields to be maintained until progress made towards full employment, inflation
Even so, the recent figures from Victoria mark a seventh consecutive day of 300+ new cases. On the other hand, numbers from Texas and Los Angeles County seem to recede off-late.
Meanwhile, the Financial Times (FT) relied on comments from the Australian Resource Minister to suggest that China’s demand for Aussie resources, mainly iron ore, soars despite diplomatic souring among the key trading partners. The same helps the Australian Dollar to combat the virus woes at home.
On Monday, Aussie Treasures Josh Frydenberg suggested an increase in small lending to offer an early sign of the policymakers’ readiness to act more if needed. The Australian diplomat is up for revealing plans of further stimulus during this week.
Considering the risk catalysts, S&P 500 Futures add 0.11% to the previous day’s close while taking rounds to 3,249 whereas Australia’s ASX 200 print 1.04% gains to 6,064 by the press time. Further to portray the risk-on mood, the US 10-year Treasury yields seesaw around 0.615% as we write.
Having witnessed the initial reaction, actually no major reaction, to the RBA minutes, AUD/USD pair traders will keep eyes on the RBA Governor Philip Lowe’s speech, at 02:30 GMT. The central banker will speak on COVID-19: The Labor Market and Public-sector Balance Sheets. Hence, market players will be closely watching the remarks considering the policymakers’ latest hawkish bias amid the second wave of the virus spread.
It should also be noted that updates from the European Summit and the US Chicago Fed Manufacturing, coupled with the vaccine news, can offer extra directives to the pair.
Technical analysis
With the pair’s sustained trading past-0.7000 round-figures, highs marked in June 2020 and July 2019, respectively near 0.7065 and 0.7085, are on the bulls’ radars. However, any downside break below 0.7000 will highlight an ascending trend line from June 15, currently around 0.6905.