Aussie yawns after more of the same from RBA

The Australian dollar is almost unchanged in the Tuesday session. Currently, the pair is trading at 0.7640, down 0.07% on the day.

RBA holds the course

There were no surprises from the RBA, which maintained its monetary policy stance at today’s policy meeting.  The central bank held the cash rate and the 3-year yield target at 0.10%.  The RBA statement made specific reference to housing lending costs, noting concern over the rise in housing prices and low interest rates. The strong recovery by the Australian economy in an ultra-low rate environment has fueled a red-hot housing market, prompting fears of a housing market crash. Australian house prices jumped in March by 2.8%, the highest increase since 1988. Aside from concerns over a housing bubble, the jump in housing prices threatens to add to already high levels of household debt. The statement also said that “the economy is operating with considerable spare capacity and unemployment is still too high.”

The RBA has said that it does not anticipate raising interest rates prior to 2024, when inflation is projected to reach the bank’s target of 2-3%. However, Australia’s economy has been recovering rapidly and it’s entirely possible that inflation could reach this target well before 2024, in which case there would be pressure on the central bank to raise interest rates.

The US dollar has cooled off, as US Treasury yields have retreated. The greenback failed to take advantage of a stellar Nonfarm Payrolls report on Friday, which rose to 916 thousand, up from 379 thousand. With the Biden administration working on a massive infrastructure package, there are expectations that upcoming NFP prints will exceed the 1-million mark, as the US economy continues to gather steam.

AUD/USD Technical

  • AUD/USD faces resistance at 0.7675. Above, there is resistance at 0.7735
  • 0.7543 is the first line of support. It is followed by support at 0.7471

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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