The Reserve Bank of Australia’s (RBA) monetary policy decision was out at 04:30 GMT on Tuesday while the recent pessimism concerning the coronavirus (COVID-19) outbreak in Victoria was prevailing in the market.

 The RBA left its currency monetary policy adjustment unchanged for the third straight August, maintaining a record low of 0.25% of the official cash ratio (OCR), widely expected.  “The Board decided to maintain the current policy framework, including targets for the monetary ratio and the yield of 25 basis points on 3-year Australian Government bonds,” the report said. “The Board decided to maintain the current policy framework. Targets for cash rates and yields of 3-year Australian Government bonds of 25 points,” the report said.

Australia’s Outbound shipments or exports rose 3% in June following May’s 4% contraction. In addition, consumer spending, as represented by seasonally adjusted retail sales rose 2.7% month-on-month in June, beating the preliminary forecast of 2.4%. Trade surplus rose to AUD 8,202 million from AUD 8,025 million.Imports rose 1% following May’s 6% contraction.

TD Securities, on the other hand, expect no major surprises from the event: “RBA Board Meeting should have the target cash rate remaining at 0.25%. The Minutes of the July meeting and the Governor’s speech released on 21st July indicated the door is shut to further policy easing, the Minutes concluding there is “no need to adjust the package of policy measures in Australia in the current environment”. Otherwise, on Tuesday the market will look to get a flavor of the Bank’s latest set of forecasts for GDP, CPI, and unemployment that will be published on Friday”

The traders are cautious amid the latest recovery in the US dollar and strict lockdown conditions in Victoria. The pandemic distracts the growth outlook in both economies.

AUD/USD 4 Hour Chart:

Support: 0.7082 (S1), 0.7042 (S2), 0.7009 (S3).

Resistance: 0.7155 (R1), 0.7189 (R2), 0.7229 (R3).

The recent data have been price-positive for Aussie but witnessing future weakness in the Aussie, due to the virus, can’t be ruled out. We expect a short term bullish trend for AUD/USD.