The AUD/USD it has lost over 30 pips following the publication of the RBA decision. The pair has fallen from the highs zone of the day, 0.7662, to the region 0.7626, touching the previous daily low at 0.7624. At time of writing, the pair is trading above 0.7628, gaining 0.1% on the day.
Bank of Australia Reserve announces more QE
At their first monetary policy meeting of 2021 held on Tuesday, February 2, the members of the board of the Reserve Bank of Australia (RBA) decided to keep the official cash rate (OCR) at a all-time low of 0.10%, coinciding with the market consensus.
As a surprise, the Board announced the purchase of 100 billion bond additions. According to the statement, the economic recovery is well advanced and has been stronger than expected. The recovery is expected to continue, and the central scenario is that the GDP grow 3.5% during 2021 and 2022. Now GDP is expected to return to its level at the end of 2019 by the middle of this year. The exchange rate has appreciated and is at the upper limit of the range in recent years.
The Board will not increase the cash rate until actual inflation is sustainably within the 2% to 3% target range. For this to happen, wage growth will have to be materially higher than it is today. This will require significant gains in employment and a return to a tight job market. Board you do not expect these conditions to be met until 2024 at the earliest.
AUD / USD levels
In case of continuing to retreat, the immediate support zone awaits at 0.7610 / 25, where the lows of yesterday and today are. Further lower, the pair could fall towards 0.7591, the bottom of January 28 and the last five weeks.
On the upside, resistance is at yesterday’s and today’s highs, 0.766263. Higher up, 0.7705 will be a barrier after being a top on January 29.