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Aussie dollar rises as RBA sounds less pessimistic on economy

Aussie dollar rises as RBA sounds less pessimistic on economy

The Australian dollar traded higher for the first time in three sessions versus its U.S. counterpart on Tuesday after the Reserve Bank of Australia (RBA) provided less downbeat tone on the economy and said it would buy more bonds.

The AUDUSD was 0.16 percent up at 0.7135 after the RBA said the economy’s outlook has been less severe than predicted and stressed that recovery will continue despite renewed lockdowns in Victoria, Queensland and New South Wales.

The economy would recover most of the losses incurred from the lockdowns imposed to contain the covid-19 pandemic before the end of next year, the RBA said.

The RBA mentioned that it “is committed to do what it can” to support jobs, incomes and businesses across the country. 

As for bind purchases, the RBA Governor Philip Lowe said: “Tomorrow the Bank will purchase AGS in the secondary market to ensure that the yield on 3-year bonds remains consistent with the target.”

The Aussie dollar has been moving upwardly since hitting a low of 0.5509 on March 19, where it hit a peak of 0.7227 on Friday, which was the highest since early February.

The latest dismal economic reports from the U.S., rising coronavirus cases and elevating tensions between the U.S. and China prompted the dollar index to suffer its worst monthly decline since September 2010 in July, falling 4.1 percent.

Eyes will focus on talks between U.S. lawmakers as they seek to reach consensus on the shape of a spending bill that help American households who suffered from the pandemic.

On the economic agenda, U.S. factory orders for June due later in the day may signal a 5.1 percent increase, following an 8.0 percent surge in May.

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