Daily Market Recap - The Australian dollar rebounds after the RBA

Today gave us the latest monetary policy meeting of the RBA. As expected, the central bank kept interest rates unchanged, confirming the target yield for the three-year government bond and the Term Finance Facility at 0.10 percent. The size of planned long-term bond purchases remained unchanged.

The overall policy message was also similar to that of February. The RBA again acknowledged that the economic recovery in Australia is proving stronger than expected but continued to reiterate that the bank does not intend to present a plan to raise rates before 2024 at the earliest.

The RBA's comments on the recent interest rate hike were more interesting. The central bank noted the recent sharp rise in yields globally and in Australia but did not seem overly concerned about these movements. It had already planned to double the average amount of long-term bond purchases yesterday to AUD 4 trillion and to resume purchases of shorter-term bonds to defend the 3-year target.

The recent volatility in the treasury market and the correction in risk assets have recently weighed on the Australian dollar. However, the economic recovery and rising commodity prices are factors that continue to support the Australian dollar.

(Chart Source: Tradingview 02.03.2021)

From a technical perspective, the AUDUSD took a step closer in confirming a bullish trend reversal after managing to hold above the pivotal 0.78 marks late in the session. That being said, the main trend in pair remains down looking at the MACD indicator. A break above 0.789 should tip the scale in favor of the bulls with the points of interest now at 0.783 and 0.787. On the flip side, failure to hold above 0.78 could trigger a correction towards the immediate support level around 0.77613.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.