- A combination of factors helps AUD / USD take advantage of its recent bounce from yearly lows.
- The diminishing odds of an earlier Fed rate hike weighs on the dollar and supports the pair’s rise.
- Strong intraday buying picks up pace after comments from RBA Governor Phillip Lowe.
The pair AUD/USD has jumped to week-long highs in reaction to RBA Governor Phillip Lowe’s comments with bulls now waiting for a sustained move beyond the 0.7600 level.
After subdued and limited price action within a range of the previous day, the AUD / USD pair has captured some aggressive trading on Tuesday and extended its strong post-NFP bounce from seven-month lows. This marks the third consecutive day of positive movement and it is due to a combination of factors.
An unexpected rise in the US unemployment rate overshadowed the large pace in the NFP headline figure and eased market fears about a tightening of monetary policies earlier than expected by the Fed. This, in turn, has acted as a headwind for the US dollar and has offered some support to the AUD / USD pair.
Buying interest has rebounded after RBA Governor Phillip Lowe, during the post-meeting press conference, said that the condition for an increase in the cash rate is related to inflation, not wages. Focusing on wages doesn’t mean we have a target for wage growth or that wage growth necessarily has to have cleared a specific benchmark before adjusting interest rates, Lowe has added.
Earlier in the day, the Australian central bank has left the benchmark interest rate and the three-year bond yield target unchanged at 0.10%. The RBA has also lowered the purchase rate from $ 5 billion to $ 4 billion per week through Nov. 11, 2021, though it has said the reduction is not a representation of the withdrawal of support.
As investors assess the RBA’s monetary policy stance, the bulls have taken a brief pause near the 0.7600 level. This is followed by recent highs around the 0.7615 region, which if decisively exceeded will set the stage for a further short-term bullish move. The AUD / USD pair could then aspire to test the next relevant hurdle near the 0.7650-60 resistance zone.
Market participants are now awaiting the US economic calendar, which highlights the publication of the ISM services PMI at the start of the US session. The data could influence USD price dynamics and generate some short-term trading opportunities. The key focus, however, will remain on the minutes of the FOMC meeting, to be released on Wednesday.
AUD / USD technical levels