AUD/USD rises 30+ pips following RBA rate cut
- AUD/USD remains on the recovery mode as RBA announced a 0.25% rate cut.
- Aussie PM signaled the need for fiscal stimulus.
- Coronavirus news from the US, South Korea question the latest risk reset.
- G7 financial leaders’ call will be in the spotlight.
AUD/USD takes the bids near the intra-day high of 0.6565 after RBA announced a 0.25% cut into its benchmark interest rates on early Tuesday. While the rate cut is already announced to the record low of 0.50% from 0.75%, eyes will be on today’s G7 call as well as the Aussie fiscal stimulus.
Read: RBA: Board took this decision to support economy as it responds to global coronavirus outbreak
RBA performed its role of surprising the markets...
Until recently the RBA was widely anticipated as not altering its benchmark interest rate during today’s meeting. However, the coronavirus outbreak ex-China, as well as the global policymaker’s push for measures, propelled the odds of the Aussie central bank’s action.
However, the Australia PM Scott Morrison dimmed prospects of any such moves a few hours before the RBA while emphasizing the need for fiscal stimulus.
Earlier during the day, mixed readings of Aussie housing market data and downbeat Current Account Balance failed to provide any clear direction to the AUD/USD pair.
That said, the market’s risk-tone remains mildly positive following the recovery of Wall Street benchmarks after Friday’s carnage.
Eyes on the G7 conference call…
Investors will be keen to observe the details of the G7 financial leaders’ conference call, around 12:00 GMT. The team will be led by the US Treasury Secretary Steve Mnuchin and the Fed Chair Jerome Powell. The global leaders are anticipated to announce measures, mostly fiscal, to confront the coronavirus impact on respective economies. During the early day, US President Donald Trump availed the opportunity to reiterate his push for the Fed’s rate cut while the ECB showed readiness to take appropriate and targeted measures.
Other than the G7 details, Fedspeak will decorate the economic calendar and will be worth monitoring for today. Though, more important than that will be the fourth quarter (Q4) Aussie GDP, up for publishing at 00:30 GMT on Wednesday.
Technical Analysis
Unless bouncing back beyond early-February lows near 0.6660, the AUD/USD prices are less likely to restore buyers’ confidence.