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Forex News: Australian Dollar Declines After RBA Holds Fire On

Australian Dollar Declines After RBA Holds Fire On Rate

06/05/2018 - 03:28:00 (RTTNews)

(RTTNews) - The Australian dollar slipped against its major counterparts in the Asian session on Tuesday, after the Reserve Bank of Australia left its key interest rate unchanged at a record low, where it has been since August 2016.

The decision was in line with expectations.

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

At the meeting, the Board judged that holding the stance of monetary policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.

The bank repeated that the low level of interest rates is continuing to support the Australian economy. Although further progress in reducing unemployment and having inflation return to target is expected, this progress is likely to be gradual, the bank noted.

The latest survey from the Australian Industry Group revealed that Australia's service sector continued to expand in May and at an accelerated pace, with a Performance of Service Index score of 59.0.

That's up from 55.2 in April, and it moves farther above the boom-or-bust line of 50 that separates expansion from contraction.

Data from the Australian Bureau of Statistics showed that Australia posted a seasonally adjusted current account deficit of A$10.469 billion in the first quarter of 2018.

That missed expectations for a shortfall of A$9.9 billion following the A$14.0 billion deficit in the three months prior.

The aussie advanced on Monday, buoyed by upbeat domestic retail sales data for April, as well as rising risk appetite following strong manufacturing and jobs data from the U.S. It rose 1.10 percent against the greenback, 1.3 percent against the yen, 0.7 percent against the euro and 0.4 percent against the kiwi for the day.

The aussie depreciated 0.4 percent to 0.7626 against the greenback, from a high of 0.7656 seen at 8:00 pm ET. The pair was valued at 0.7648 when it had closed deals on Monday. The aussie is seen finding support around the 0.75 region.

The aussie, having advanced to 1.5280 against the euro at 5:00 pm ET, reversed direction and dropped to 1.5325. The euro-aussie pair was worth 1.5294 at yesterday's close. The aussie is poised to challenge support around the 1.55 level.

Pulling away from an early high of 0.9894 against the loonie, the aussie weakened to 0.9864. The aussie was quoted at 0.9883 against the loonie at yesterday's close. Next key support for the aussie is likely seen around the 0.96 level.

Following a 2-week high of 84.18 hit at 8:00 pm ET, the aussie retreated to 83.80 against the yen. The next likely support for the aussie is seen around the 82.00 level.

Survey from Nikkei showed that Japan's services sector continued to expand in May, albeit at a slower pace, with a services PMI score of 51.0.

That's down from 52.5 in April, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

On the flip side, the aussie eased back to 1.0851 against the kiwi and held steady thereafter. At yesterday's close, the pair was worth 1.0874.

Looking ahead, PMIs from major European economies and Eurozone retail sales for April are due in the European session.

In the New York session, Markit's U.S. services PMI and ISM non-manufacturing composite PMI for May are scheduled for release.

For comments and feedback: contact editorial@rttnews.com

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