Forex News: Australian Dollar Falls After RBA Rate Cut Decision

Australian Dollar Falls After RBA Rate Cut Decision

(RTTNews) - The Australian dollar weakened against other major currencies in the Asian session on Tuesday, after Australia's central bank lowered its benchmark rate by a quarter-point, as risks to inflation became more balanced.

The policy board of the Reserve Bank of Australia, governed by Michele Bullock, decided to cut the cash rate target to 3.85 percent from 4.10 percent.

Previously, the bank had reduced the rate by 25 basis points in February, which was the first cut since 2020.

In a press conference following the policy announcement, RBA Governor Michele Bullock emphasized the importance of controlling inflation and expressed confidence in the RBA's capacity to do so.

Governor Bullock praised the rate drop as a proactive, confidence-building moves, noting that it is the proper action given the present economic conditions.

She also stated that the Board is still prepared to take additional action if necessary, and that additional changes may be made in the future.

In other economic news, the People's Bank of China reduced its benchmark interest rate for the first time in seven months to stimulate consumption and support the property market amid soothing trade tensions.

The central bank lowered its one-year loan prime rate by 10 basis points to 3.0 percent from 3.10 percent. Likewise, the five-year LPR, the benchmark for mortgage rates, was reduced to 3.50 percent from 3.60 percent.

The bank had cut its both LPRs by 25 basis points each in October 2024.

In the Asian trading today, the Australian dollar fell to an 8-day low of 1.0850 against the NZ dollar, from a recent high of 1.0892. The aussie may test support around the 1.07 region.

Against the yen, the aussie slipped to 92.95 from a recent 5-day high of 93.85. If the aussie extends its downtrend, it is likely to find support around the 91.00 region.

Against the U.S. and the Canadian dollars, the aussie edged down to 0.6423 and 0.8968 from recent highs of 0.6455 and 0.9010, respectively. On the downside, 0.62 against the greenback and 0.88 against the loonie are seen as the next support levels for the aussie.

The aussie dropped to 1.7512 against the euro, from a recent high of 1.7390. The next possible downside target for the aussie is seen around the 1.77 region.

Looking ahead, Canada CPI data for April, U.S. Redbook report and U.S. flash consumer confidence for May, are slated for release in the New York session.

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