AUD/USD extends rally beyond 0.6850 on risk flows
- AUD/USD trades at its highest level since mid-January.
- RBA left its policy rate unchanged at 0.25% as expected.
- Major global equity indexes rise sharply on Tuesday.
The AUD/USD pair gained nearly 50 pips on Monday and preserved its bullish momentum on Tuesday. As of writing, the pair was trading at 0.6855, a little below the multi-month high it set at 0.6870, gaining 0.85% on the day.
RBA keeps status quo
Earlier in the day, the Reserve Bank of Australia (RBA) announced that it left its policy unchanged at 0.25% as expected. In its policy statement, the RBA reiterated that the accommodative approach to the monetary policy will be maintained. However, the RBA further noted it was possible that the depth of the downturn could be less than earlier expected and helped the AUD gather strength.
Additionally, the upbeat market mood, as reflected by surging global equity indexes, is providing an additional boost to the risk-sensitive AUD. If Wall Street's main indexes capitalize on risk-on flows, the pair could continue to edge higher during the American session. At the moment, the S&P 500 futures are up 0.4% on a daily basis.
On the other hand, the greenback, which is seen as a safe-haven currency, remains on the back foot for the sixth straight day and allowing the pair to cling to its gains. Ahead of the American session, the US Dollar Index is losing 0.22% at 97.60.
In the early trading hours of the Asian session, Gross Domestic Product (GDP) data from Australia will be looked upon for fresh impetus. Markets expect the Australian economy to contract by 0.3% in the first quarter.
Technical levels to watch for