At its April policy meeting, the Governing Board of the Reserve Bank of Australia (RBA) expectedly decided to maintain the near-negative Cash Rate unchanged at 0.10 per cent.
The rate of asset purchases was not scaled up, even though the Board is prepared for continuously subdued 'wages and price pressures. Overall, the RBA has observed a stronger-than-initially-projected pace of economic recovery, but inflation remains moderately below the Bank's 2.0 per cent target.
Unlike the situation in the U.S., where the Federal Reserve has to cope with soaring prices, the RBA expects the Australian economy to remain "operating with a considerable spare capacity". Phillip Lowe, Governor of the RBA, had this to say about it:
"The economic recovery in Australia is well under way and is stronger than had been expected. The unemployment rate fell to 5.8 per cent in February and the number of people with a job has returned to the pre-pandemic level. […] It will take some time to reduce this spare capacity and for the labour market to be tight enough to generate wage increases that are consistent with achieving the inflation target."
The strong rebound in Australian activity is partly due to a global economic pickup, inspired by the considerable fiscal support in the U.S. Though the pace of the ongoing global recovery remains patchy and uneven, the underlining prospects are improving as the vaccine rollout continues.
Meanwhile, the Australian dollar's temporary stabilisation appears more or less over given the strengthening U.S. dollar. As can be seen on the 4H chart below, the AUDUSD has completed an intermediate bullish correction.
This can be inferred from the fact that the price action has reached the upper boundary of the descending channel, all the while it has been consolidating just below the 100-day MA (in blue).
Unless it manages to decisively break out above the channel in the very near future, the AUDUSD is very likely to establish yet another bearish reversal. This would then likely be followed by another dropdown towards the first target level - the major support at 0.76000.