Aussie Gains Control Amid RBA Cling, Dollar Recovery Hopes Dissipate

After the momentum of the recovery dissipates, the dollar is softening again. The euro and Swiss franc are in charge again, but they are still restricted overall. The Australian dollar holds a close eye on how the RBA performs as expected. Recovery is still pending, and the center does not seem to be worried about the recent increase in the exchange rate for the Aussie. Today’s economic calendar is reasonably light and traders will look to the events of tomorrow.

Technically, the Dollar cannot confirm a sustained bounce as EUR/USD recovered from a brief break of the minor support at 1.1698. The situation is similar for GBP/USD but recovered after reaching minor support at 1.3013. AUD/USD is even holding off from 0.7063 support.

However, these levels will remain in favor of the rest of the week as more important data arrives. AUD/NZD is a pair to monitor upcoming employment data in New Zealand. With today’s bounce, the focus is back at the temporary top of 1.0800 and the break will extend the rebound from 1.0565 to the 1.0880 high.

RBA Is Unchanging, Anticipates Recovery to Be Uneven
The RBA left monetary policy unchanged, as expected, keeping the yield and AGS three-year yield at 0.25%. The central bank also pledged that “the adaptive approach will continue as long as it is needed.” It “will not increase the money rate target until progress is made” for full employment and inflation.

The RBA confirmed that the economic downturn is “not as severe as previously expected.” However, the recovery is likely to be “uneven” as the coronavirus outbreak in Victoria will have a “serious impact” on its economy.

Production would fall by -6 percent in the reference case by 2020 and then rise by 5 percent. Owing to job losses in Victoria, this year the unemployment rate may hit around 10 percent. The unemployment rate is predicted to decrease slowly over the next few years to about 7 percent. Inflation is projected to remain below the 2 percent level in all analyzed parameters for the next few years