- AUD/USD climbed to two-year highs above 0.7400 during the Asian session.
- RBA keeps policy rate steady at 0.25 Percent, in line with expectations.
- US dollar index struggles below 92, awaits US PMI.
The AUD/USD maintained its bullish mode during the Asian trading and touched its highest level since August 2018, at 0.7414. It couldn’t sustain the bullishness going into the US open and shed the gains to trade flat for the day at 0.7375.
RBA Policy Ignored By the Aussie
The Reserve Bank of Australia today left its policy rate unchanged at 0.25 Percent as expected by the market. The central bank said it would undertake additional government purchases as necessary. But, AUD/USD didn’t react to the announcements.
RBA seems to have exhausted the conventional monetary tools after having cut the OCR to its self-imposed floor of 0.25 Percent. Hence, the analysts are not expecting any reductions in the policy rate as the central bank governor has already ruled out the negative interest rates.
The US dollar’s safe-haven appeal is also in limited demand as the markets are in a risk-on environment on the back of the developments regarding the vaccine against coronavirus.
Today, IHS Markit’s and the ISM’s Manufacturing PMI data is due on the US docket, and the dollar index is down 0.3 Percent to 91.90. PMI might show an expansion in the manufacturing sector activity. But, if the readings surprises with a sub-50, then the USD will be back in strength and could pull down the AUD/USD.