AUD/USD one-month ATM Vol hits 3-1/2 month high ahead of the RBA rate decision

AUD/USD rose to a high of 0.8043 this Tuesday morning on the back of an upbeat China PMI manufacturing data and broad based USD weakness. 

All eyes are on the RBA rate decision. The central bank is widely expected to keep the interest rates unchanged at a record low of 1.25%. The AUD traders would watch out for the RBA's take on the soaring Aussie and updated forecasts for Australian economic growth, inflation and unemployment.

• Ahead of the RBA rate decision, the AUD/USD one-month ATM option volatility rose to a 3-1/2 month high of 8.75. 

The uptick in the vols adds credence to the bullish move in the pair, although the Aussie-US 10-year bond yield spread is still hovering way below its recent high of 50 basis points.