Fundamental Comment

Aussie dollar climbs as RBA downplays need to ease policy

Aussie dollar climbs as RBA downplays need to ease policy

The Australian dollar traded higher for a third straight session versus its U.S. counterpart on Tuesday after the Reserve Bank of Australia (RBA) minutes lowered the need to further ease policy.

The AUDUSD was 0.18 percent up at 0.7227 after the RBA minutes hinted that there was no need to ease monetary policy further policy at the meantime as the undertaken measures were working “broadly as expected”.

"Members reaffirmed that there was no need to adjust the package of measures in Australia in the current environment,", the RBA minutes said, stressing that recovery was underway in most of Australia and the downturn had not been as severe as earlier predicted.  

Additionally, the Aussie dollar got support from the lower COVID-19 cases in Victoria and New South Wales, as Australia is meanwhile set to record its lowest one-day increase in infections in a month.

On the other hand, the dollar has remained vulnerable versus major currencies, amid the simmering tensions between the U.S. and China and uncertainty about the U.S. new stimulus package.

The dollar index drifted downwardly for a fifth consecutive session, where it hit a new two-week bottom at 92.47.

The U.S. announced on Monday the adoption of additional restrictions on Huawei’s access to chips in 38 Huawei affiliates in 21 countries.

Eyes will now focus on the U.S. Congress, as lawmakers will try to reach consensus on a new stimulus after ending sessions last week without an agreement.

On Wednesday, the Federal Reserve will release its minutes that may signal the implementation of an average inflation target and probably to push inflation above 2 percent for a while.

Despite the current jittery sentiment, Australia’s S&P/ASX 200 benchmark index finished 0.77 percent up at 6,123.40.

Share Article