AUD/USD stands out by trading near 0.74, a substantial gain

On Tuesday, AUD/USD stands out by trading near 0.74, a substantial gain. The Aussie is underpinned by the Reserve Bank of Australia's decision to go ahead with tapering its bond buys. Economists at Westpac expect the pair to hit the 0.7450 level. The RBA appears to be looking through the current delta breakout in NSW noting that ‘the experience to date has been that once virus outbreaks are contained, the economy bounces back quickly’ and that ‘some increase in the unemployment rate is expected in the near term due to the current lockdowns, but most of the adjustment in the labor market is likely to take place through a reduction in hours worked and in participation’.

The RBA did not defer its taper decision though the statement did note that ‘the program will continue to be reviewed in light of economic conditions and the health situation’. Not surprisingly, the AUD/USD pair has jumped sharply and could jump further still. A push up to the top of the down-channel at 0.7450 certainly seems quite possible – and a close above that level would point to a push towards 0.75.