AUD / USD stabilizes below 0.7400, appears to post big daily losses

• AUD / USD on track to close second day in a row in negative territory.
• The US dollar index is rising on rising Treasury yields.
• RBA left its policy rate unchanged as expected.

The AUD / USD pair advanced further with the initial reaction to the Reserve Bank of Australia (RBA) policy announcements during the Asian session, but reversed its direction and fell steadily throughout the remainder of the day. At time of writing, the pair, which touched a daily low of 0.7375, was down 0.6% to 0.7395.

RBA’s cautious outlook hurts the AUD

Unsurprisingly, the RBA left its monetary policy rate unchanged after the September monetary policy meeting. In its policy statement, the bank noted that the Delta outbreak is expected to delay, but not detail, the economic recovery.

Although the RBA went ahead and lowered the government’s weekly security purchase rate to A $ 4 billion, it also noted that it will continue to do so until at least mid-February 2022. At its previous meeting, the bank had said it would re-evaluate the Asset reduction plan in November. This decision appears to have caused the AUD to weaken against its rivals.

Commenting on the AUD / USD reaction, “the overnight price action is disappointing for those looking for the AUD to further strengthen in the near term,” analysts at MUFG Bank said. “We expected a more positive reaction in response to a decision by the RBA to stick to their QE recorder plans given to us and the consensus opinion was for a delay.”

On the other hand, the decisive rally observed in the benchmark 10-year US Treasury yield provided a boost to the Aussie in the absence of macroeconomic data and forced AUD / USD to continue pushing lower. Currently, the US Dollar Index is up 0.28% on the day at 92.46.

Technical levels to take into account