AUD/USD tilts higher after the hawkish RBA interest rate decision
- The AUD/USD pair tilted upwards after the RBA rate decision.
- The bank left interest rate and QE unchanged as most analysts were expecting.
- The pair will then react to the US non-farm payroll numbers set for Friday.
The RBA concluded its two-day meeting and delivered its rate decision on Tuesday morning. As expected, the central bank left the interest rate unchanged at 0.10%. It also announced that it would continue to make its asset purchases in a bid to spur economic growth. The bank also left its yield curve control plan intact. It is using this plan to keep the 3-year government bonds in check.
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The RBA also boosted the outlook for Australian growth to 4.75% this year and 3.5% in 2022. It also expects the unemployment rate will fall to 5%.
The rate decision came a day after data by Markit revealed that the manufacturing sector continued to expand in April, helped by higher demand. It also came at a time when a commodity boom is going on. Last week, the price of iron ore surged to a record high as demand from China continued.
Meanwhile, the boom in the property market has continued, with prices surging in places like Sydney and Melbourne. The bank said:
“Given the environment of rising housing prices and low-interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.”
Further, the RBA decision came a few hours after the Australian Bureau of Statistics (ABS) reported the latest trade data. Exports declined by 2% in March to more than A$38 billion while imports rose by 4% to A$32.7 billion. As a result, the rade surplus declined by more than A$2 billion to A$5.5 billion. Exports and imports are expected to remain at elevated levels as the country reopens.
The four-hour chart shows that the AUD/USD pair has formed a rectangle pattern in the past few days. The support and resistance levels of this pattern are at 0.7697 and 0.7816, respectively. The pair remains between the 23.6% and 38.2% Fibonacci retracement levels. It is also slightly below the 25-day and 15-day exponential moving averages (EMA). Therefore, the pair will likely remain in this channel in the near term and then make a bullish breakout. For this to happen, bulls will need to move above the resistance at 0.7800. You can trade this price action using a high leverage forex broker.