RBA pumps liquidity, proposes bond buys to ease financial conditions, AUD/USD rallies 2%

The Reserve Bank of Australia, on Tuesday, injected A$6.9 billion ($4.06 billion) into the financial system and announced it would buy A$4 billion in government bonds to cushion the economic blow from the coronavirus crisis.

On Monday, the RBA bought A$4 billion ($2.3 billion) in local government bonds, as a part of its quantitative easing (QE) programme announced last Thursday.

The total number of cases in Australia jumped to almost 1,900 on Tuesday while industry experts believe that a recession in the OZ economy for the first time in 30 years is inevitable despite the fiscal stimulus measures.

AUD/USD reaction

The Aussie is benefiting the most from broad-based US dollar weakness and an improved market sentiment amid global central banks’ pumping in liquidity to ease the economic concerns.

Further the Fed’s unlimited QE decision led rally in gold prices is also adding to the upside in AUD/USD, as it now trades near 0.5940 region, up nearly 2% on the day.