The Australian dollar has fallen 40 pips against the US dollar after the Reserve Bank of Australia announced that it is keeping its rates unchanged and suspending further bond purchases. The AUD/USD has dropped to daily lows at 0.7032 and trades at time of writing above 0.7041, down 0.40% daily.
At its meeting today, the Board of the RBA decided to keep target cash rate at 10 basis points, as expected, and the interest rate on the Exchange Settlement balances at 0%. The entity has also decided to suspend additional purchases under the bond purchase program, with final purchases to be made on February 10.
The decision to end the purchases on the grounds that it follows a review of other central bank actions, the performance of Australia’s bond market and progress towards full employment and inflation targets consistent with target, according to the RBA statement.
The central bank has also wanted to emphasize that the cessation of purchases under the bond purchase program does not imply a short-term increase in interest rates.
Traders in the pair will digest the data in the coming hours waiting for the US ISM manufacturing data for January, which may move the market, expecting a retracement to 57.5 from 58.7 points in December.
AUD/USD Levels
In case the cross continues to fall, the next support appears in the area 0.7000. Below, the descent can accelerate towards 0.6966, the floor of January 28 and the lowest level seen by the pair since July 2020.
To the upside, initial resistance is around 0.7075/78, maximum levels of today and yesterday, respectively. above 0.7100, the next barrier appears in 0.7182, roof of January 26.
Source: Fx Street
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