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AUD / USD turns away from daily highs and stabilizes around 0.7350 ahead of Powell’s testimony

  • AUD / USD is trading in a tight range after Monday’s slide.
  • The RBA kept its monetary policy unchanged as expected.
  • Risk appetite continues to weigh on the USD.

The pair AUD/USD it lost 50 pips on Monday and struggled to make a significant bounce on Tuesday. At time of writing, the pair was up 0.08% on the day at 0.7350.

RBA does not trigger a market reaction

At its December monetary policy meeting, the Reserve Bank of Australia (RBA) decided to keep its policy rate unchanged at 0.1% as expected. In its policy statement, the RBA noted that it does not expect to raise the policy rate for at least three years, adding that it will keep the size of bond purchases under review. However, the AUD did not show an immediate reaction to the RBA’s announcements.

Meanwhile, data from Australia revealed that business activity in the manufacturing sector continued to expand at a robust pace in November with the Commonwealth Bank’s manufacturing PMI reaching 55.8%.

On the other hand, the risk-positive market environment is forcing the safe-haven dollar to remain on the defensive and allows AUD / USD to comfortably hover above 0.7300. At the moment, the US Dollar Index is down 0.08% on the day to 91.80 and the S&P 500 appears to start the day on a decisive rally.

In the second half of the day, FOMC Chairman Jerome Powell will testify before Congress. Additionally, IHS Markit and ISM will release November Manufacturing PMI data.

Technical levels


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