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Forex News: Australian Dollar Erases Losses As RBA Keeps Cash

Australian Dollar Erases Losses As RBA Keeps Cash Rate Steady

06/06/2017 - 01:45:00 (RTTNews)

(RTTNews) - The Australian dollar trimmed its early losses against its major rivals in the Asian session on Tuesday, after the Reserve Bank of Australia maintained its cash rate unchanged as the board opted to keep monetary policy accommodative to attain sustainable economic growth and meet inflation target gradually.

The RBA board, 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.

"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 expects economic growth to increase gradually over the next couple of years to a little above 3 percent.

Data showing a wider-than-expected current account deficit in Australia, as well as rising risk aversion undermined the aussie in the early Asian session.

Australia's current account deficit was A$3.108 billion in the first quarter of 2017, according to figures from the Australian Bureau of Statistics.

That missed forecasts for a shortfall of A$0.5 billion following the A$3.5 billion deficit in the previous three months.

Asian stock markets are mostly lower following the weak cues overnight from Wall Street and as investors digested the impact of six Arab countries including Saudi Arabia having cut diplomatic ties with Qatar.

The aussie rose against its major counterparts on Monday, buoyed by upbeat Chinese services PMI for May. The currency added 0.7 percent against the kiwi, 0.8 percent against the euro and 0.6 percent each against the greenback and the yen for the day.

The aussie bounced off to 0.7496 against the greenback, from a low of 0.7457 hit at 9:30 pm ET. The aussie is likely to find resistance around the 0.76 level.

The aussie, having fallen to 1.5110 against the euro at 9:30 pm ET, reversed direction and rose back to 1.5030. If the aussie extends rise, it may target 1.48 as the next resistance level.

The aussie recovered from its early losses against the loonie with the pair trading at 1.0080. This may be compared to a low of 1.0047 hit at 9:45 pm ET. The next possible resistance for the aussie-loonie pair is seen around the 1.02 mark.

The Australian currency staged a tepid recovery to 1.0469 against the NZ dollar, from a low of 1.0430 hit early in the session. This may be compared to a 5-day high of 1.0506 set at 7:30 pm ET. Continuation of the aussie's uptrend is likely to see it challenging resistance around the 1.065 area.

Data from Statistics New Zealand showed that the total volume of building in New Zealand fell a seasonally adjusted 3.5 percent on quarter in the first three months of 2017.

That misses forecasts for a gain of 0.3 percent following the downwardly revised 1.3 percent increase in the previous three months.

The aussie reversed from an early low of 81.91 against the Japanese yen, bouncing off to 82.39. On the upside, the aussie is likely to locate resistance around the 83.5 region.

Looking ahead, Eurozone Sentix investor sentiment index for June and retail sales for April are due in the European session.

Canada Ivey PMI for May is set for release in the New York session.

For comments and feedback: contact editorial@rttnews.com

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