At its September monetary policy meeting this Tuesday, the Reserve Bank of Australia (RBA) board members kept the official cash rate (OCR) unchanged at a record low of 0.25%, as widely expected. “The board decided to maintain the targets for the cash rate and the yield on 3-year Australian government bonds of 25 basis points,” the statement read.

Banks will be able to draw upon this extra funding up until the end of June 2021.”This will help keep interest rates low for borrowers and support the provision of credit by providing (banks) greater confidence about continued access to low-cost funding,” RBA Governor Philip Lowe said in a post-meeting statement.

The RBA also hinted at further measures, while reiterating policy rates will remain low for a long time to come. He said, “The Board will maintain highly accommodative settings as long as is required and continues to consider how further monetary measures could support the recovery.”

Whereas The Caixin/Markit Manufacturing Purchasing Managers Index(PMI) rose to 53.1 last month from July’s 52.8, marking the sector’s fourth consecutive month of growth and the biggest rate of expansion since January 2011.

It was reported that  China’s factory activity expanded at the fastest clip in nearly a decade in August, bolstered by the first increase in new export orders this year as manufacturers ramped up production to meet rebounding demand, a private survey showed on Tuesday, This has favored the cyclical currency – Australian dollar.

Australia’s current account surplus in seasonally adjusted terms increased $8.7 billion to $17.7 billion in the June quarter 2020, driven mainly by increased goods and services surplus, according to the latest figures from the Australian Bureau of Statistics (ABS).

AUD/USD 4 Hour Chart:

Support:  0.73400 (S1), 0.7308 (S2), 0.7277 (S3).

Resistance: 0.7403 (R1), 0.7434 (R2), 0.7466 (R3).

Australian dollar has been benefiting from the cash rate and Australia’s current account surplus, which makes it stronger than USD. We expect a bullish trend for AUD/USD.