AUDUSD rebounds from below 0.6660 despite PBOC keeps interest rate policy stable

• AUDUSD has resurfaced after slipping below 0.6660 despite unchanged PBOC’s monetary policy.
• Led by rising Covid-19 cases and weaker real estate demand, the PBOC was expected to sound dovish.
• Going forward, the speech from RBA’s Lowe will be of utmost importance.

The AUDUSD has retreated after dropping below the immediate support of 0.6660 despite the People’s Bank of China (PBOC) keeping its stance on interest rates ‘unchanged’.Earlier, the asset witnessed selling pressure while attempting to cross the immediate hurdle of 0.6680 in the Tokyo session.

Led by rising infections of Covid-19 and vulnerable real estate demand in China, the PBOC was expected to sound ‘dovish’ on its Prime Lending Rates (PLRs). The domestic catalysts have weakened economic projections extremely, therefore a rate cut was in consideration. An absence of expansionary measures in the monetary policy has brought volatility in the Australian dollar, being a leading trading partner of China.

Last week, the release of upbeat Australian employment data delighted the Reserve Bank of Australia (RBA). As per the Australian Bureau of Statistics, the economy managed to make fresh additions in the payroll market by 32.2k vs. the consensus of 15k and the prior release of 0.9k. Also, the Unemployment Rate was trimmed to 3.4% vs. the expectations of 3.6% and the former figure of 3.5%. This might support the RBA in hiking its Official Cash Rate (OCR) unhesitatingly.

Meanwhile, the US dollar index (DXY) has established above the round-level hurdle of 107.00 and has accelerated to near Tuesday’s high of 107.24. A rebound in the negative market sentiment is impacting the risk-perceived currencies. The 10-year US Treasury yields have dropped further below 3.81% as chances of the continuation of 75 basis points (bps) rate hike spell by the Federal Reserve (Fed) have trimmed vigorously.

Going forward, investors will focus on the speech from RBA Governor Philip Lowe, which will be delivered on Tuesday. RBA Governor may dictate the likely monetary policy actions ahead.