USD to AUD Rate Bouncing As PBOC Leaves LPR Unchanged

The USD to AUD rate has been bouncing up and down as it keeps fluctuating within a narrow 1-cent range, despite RBA’s hawkish bias during their meeting earlier in the week. However, both the FED and the RBA are not signaling the start of the rate-cutting process soon. The PBOC also left the LPR rates unchanged last night, so this forex pair continues to bounce between MAs.

AUD/USD Chart Daily – Moving Averages Acting As Support and Resistance

Following the release of disappointing US Consumer Price Index (CPI) inflation data last Wednesday, the AUD/USD pair experienced a notable increase, breaking above the 200-day Simple Moving Average (SMA). However, the price quickly retreated back within its previous range and trended towards the lower end. On the daily chart, support levels emerged around the 100-day SMA (red), stabilizing the decline temporarily.

This week, buyer interest renewed as the AUD/USD pair rebounded from the lower levels, marking a three-day recovery streak. The pair surged to test the upper-0.6600s, reaching multi-session highs. This upward movement was driven by improved sentiment in risk-related markets, ongoing weakness in the US Dollar (USD), and further market adjustments following recent developments from the Reserve Bank of Australia (RBA) meeting.

Reserve Bank of Australia Hawkish Bias

The Reserve Bank of Australia (RBA) maintained its hawkish stance earlier this week, opting to hold the official cash rate (OCR) steady at 4.35%. During the presser, Governor Bullock disclosed that the RBA board had considered the possibility of further rate hikes which is a hawkish sign for the Aussie.

Bullock underscored their commitment to maintaining a tight policy stance until there is a clear necessity to ease. The RBA noted that inflation remains stubbornly above its target range, reaffirming its determination to take whatever steps are necessary to bring inflation back within the desired boundaries. This new commitment underscores the central bank’s hawkish approach.

PBOC Loan Prime Rates (LPR):

• One-Year LPR:
  • Rate: 3.45%
  • Status: Unchanged for 10 months
• Five-Year LPR:
  • Rate: 3.95%
  • Change: Cut in February from 4.20%

The People’s Bank of China (PBOC) has maintained its Loan Prime Rates (LPR), with the one-year rate holding steady at 3.45%, unchanged for the past 10 months. Meanwhile, the five-year LPR stands at 3.95%, reflecting a reduction made in February from the previous rate of 4.20%. These rates are key benchmarks for lending in China, influencing borrowing costs for both businesses and consumers.

AUD/USD Live Chart