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Forex News: Australian Dollar Climbs After RBA Keeps Rate On

Australian Dollar Climbs After RBA Keeps Rate On Hold

07/03/2018 - 03:00:00 (RTTNews)

(RTTNews) - The Australian dollar strengthened against its major counterparts in the Asian session on Tuesday, trimming its early losses, after Australia's central bank decided to leave its key interest rate unchanged at a record low, consistent with its aim of "sustainable growth in the economy and achieving the inflation target over time."

The decision was widely expected.

The board of the Reserve Bank of Australia, governed by Philip Lowe, voted to maintain the cash rate at 1.50 percent. The bank had reduced the rate by 25-basis points each in August and May last year.

"The Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time," the bank said in a statement.

The bank reiterated the low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual, RBA said.

Data from the Australian Bureau of Statistics showed that Australia building approvals fell a seasonally adjusted 3.2 percent on month in May, coming in at 17,791.

That was shy of expectations for a flat reading following the 5.0 percent decline in April.

Asian stock markets were mostly lower, as worries about trade wars between the U.S. and other major economies weighed on investor sentiment. Tariffs on $34 billion worth of Chinese imports to the U.S. and a matching $34 billion worth of U.S. exports to China are due to take effect on July 6.

The aussie dropped against its most major opponents on Monday, as lingering trade worries, falling oil prices, soft Chinese manufacturing data and German political uncertainty dampened risk sentiment. It lost 0.7 percent against the yen, 0.9 percent against the greenback and 0.6 percent against the euro for the day.

The aussie bounced off to 0.9714 against the loonie and 0.7373 against the greenback, from its early lows of 0.9661 and 0.7314, respectively. The next likely resistance for the aussie is seen around 0.98 against the loonie and 0.75 against the greenback.

The aussie firmed to 1.0977 against the kiwi, its highest since January 31. If the aussie continues its rise, 1.11 is possibly seen as its next resistance level.

The aussie edged up to 1.5801 against the euro, after having fallen to near a 2-month low of 1.5888 at 9:45 pm ET. The aussie is seen finding resistance around the 1.56 level.

Following a low of 81.03 hit at 9:45 pm ET, the aussie reversed direction and rose to 81.82 against the yen. Next key resistance for the aussie is likely seen around the 83.00 level.

Data from the Bank of Japan showed that Japan monetary base advanced 7.4 percent on year in June, coming in at 493.363 trillion yen.

That follows the 8.1 percent gain in May.

Looking ahead, U.K. construction PMI for June and Eurozone retail sales and PPI for May are due in the European session.

In the New York session, U.S. factory orders and durable goods orders for May will be out.

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