AUD / USD extends recovery above 0.7130 despite moderate RBA change

• AUD / USD is rising sharply for the second day in a row.
• The RBA lowered its policy rate to 0.1% and extended QE by A $ 100 billion.
• The dollar remains under strong selling pressure ahead of the US presidential elections.

After closing the first day of the week in positive territory, the pair AUD/USD it declined with the initial reaction to the Reserve Bank of Australia (RBA) policy announcements. However, the risk appetite environment in the market and the widespread selling pressure surrounding the dollar provided a boost to AUD / USD during European trading hours and lifted it to a daily high of 0.7139. At time of writing, the pair was up 1.11% on the day at 0.7131.

RBA delivers more than expected, AUD ignores

As expected, the RBA lowered its policy rate to 0.1% from 0.25% after its November policy meeting. The bank also decided to expand its quantitative easing (QE) program by A $ 100 billion. Commenting on the outlook for the policy, RBA Governor Phillip Lowe said they have done their best with rates, adding that they will shift their focus to QE in case further easing is needed.

Commenting on the RBA’s policy statement, “whether the Bank delivers more stimulus will depend on the jobless outlook and market performance over the next six months,” analysts at TD Securities said. “If the RBA needs to do more, we think it has more room to do it.”

Despite the subdued tone of the RBA, the risk-sensitive AUD capitalized on the bullish mood of the market and began to capitalize on Monday’s gains. For the moment, S&P 500 futures are up 1.1% on the day, suggesting that major Wall Street indices are likely to open sharply higher on Tuesday. Meanwhile, the US Dollar Index is down nearly 0.5% on the day at 93.60.

However, it is difficult to say whether risk flows will continue to dominate financial markets later in the day as investors are likely to sideline as they prepare for the first election results to hit the news in the Asian session. .

Technical levels