AUD/USD looks to reclaim 0.7300 on anticipation of a hawkish monetary policy by RBA

• AUD/USD is eyeing 0.7300 amid a risk-off impulse despite no outcome of Russia-Ukraine peace talks.
• Investors will focus on monetary policy decisions from the RBA.
• Market estimates see an interest rate hike of 15 bps in the July-September quarter by the RBA.

The AUD/USD pair has witnessed a juggernaut rally after a bearish opening gap on Monday. The major has added 0.46% after surpassing Friday’s high at 0.7237 and trading near 0.7263, at the press time. There is no denying the fact that the rally is backed by a rebound in the market impulse. The market has remained vulnerable for risk-perceived assets on the continuous invasion of Ukraine by the Kremlin despite escalating sanctions to cripple its economy has improved the safe-haven appeal.

A pullback has been observed in the market impulse after a spree of risk-aversion appeal in the market. The investors have considered the peace talks between Ukraine and Moscow as an initiative to ceasefire despite the fact that the negotiations have ended with no material outcome.

Apart from the improvement in risk appetite, Tuesday’s monetary policy decision by the Reserve Bank of Australia (RBA) is in focus.

Investors should be cognizant that the RBA is maintaining its status quo by keeping the benchmark rates unchanged. However, to contain the soaring inflation at 3.5%, recorded in Dec 2021, over the targeted inflation rate of 2-3%, RBA’s Governor Philip Lowe might resort to raising interest rates now.

In the latest Feb. 18-24 Reuters poll, economists brought forward their rate hike expectations for a fourth straight month and expect the RBA to raise its key interest rate by 15 basis points to 0.25% in the July-September quarter, as per Reuters. Therefore, the market doesn’t see an interest rate hike n Monday.

The US dollar index (DXY) tumbles below 97.00 amid a risk-off impulse in the market, which has brought a pullback in the greenback. Meanwhile, the monthly Retail Sales from the Australian Bureau of Statistics have jumped to 1.8% from the previous print of (4.4%), which has also underpinned the Aussie against the greenback.