The Australian Dollar, battered to 2002 lows towards the end of March, bounced back strongly, only to hit a brick wall at the 0.6200/20 area. Yesterday the Aussie made another attempt to rally past 0.6200/20, jumping from 0.6100 only to be thwarted by willing sellers at 0.62080. The RBA kept its Official Cash Rate at the all-time low at 0.25% while maintaining policy and its current QE program. Rhetoric from the Australian central bank that they would continue to monitor financial conditions, and should conditions ease, its likely it would reduce the size and frequency of bond purchases. This saw Australian 10-year bond yields lift to 0.90%, up 13 basis points from 0.76%. With US 10-year bond rates at 0.71%, this puts Aussie yields ahead of the US.

The RBA is a bit premature to suggest they would taper QE at this stage. Tomorrow sees the release of the RBA’s Financial Stability review. Coronavirus headlines will continue to drive FX, including the Australian Dollar. So far Asian Covid-19 cases have been under the radar because there is not much reporting done and the focus is on Europe and the US. This could change soon and negatively affect the Aussie.

AUD/USD has immediate resistance at 0.6210/20 followed by 0.6250. Immediate support can be found at 0.6160 followed by 0.6120. Look for a likely range today of 0.6130-0.6230. Prefer to sell rallies, the Battler is not quite out of the woods just yet.