Market Commentary and Intraday News

Australian Dollar Climbs After RBA Rate Decision

287 days ago

(RTTNews) - In the Asian session on Tuesday, the Australian dollar that bounced back from its early lows against other major currencies has been advancing after the country's central bank kept its key rate unchanged, as expected by economists.

At its meeting, the Board maintained the cash rate at 3.50 percent. The bank eased monetary policy in May and June, lowering the cash rate by a total of 75 basis points.

As a result of the sequence of earlier decisions, interest rates for borrowers are a little below their medium-term averages, the central bank said.

The Board today judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate.

Australia saw a current account deficit of A$11.801 billion in the second quarter of 2012, the Australian Bureau of Statistics said early in the day.

That beat forecasts for a shortfall of A$12.2 billion following the A$14.892 billion deficit in the first quarter.

The aussie is now trading at 1.0275 against the U.S. dollar and 1.0128 against the Canadian dollar, up from near a 6-week low of 1.0226 and a 3-month low of 1.0090, respectively hit in early Asian deals. If the aussie rises further, it may target 1.035 against the greenback and 1.02 against the loonie. The Australian currency ended yesterday's deals at 1.0250 against the greenback and 1.0107 against the loonie.

After sliding to a new 2-month low of 1.2334 against the euro at 12:25 am ET, the aussie gained thereafter. The euro-aussie pair is now trading near yesterday's close of 1.2293. On the upside, the aussie may target 1.22 level.

Moody's Investors Service downgraded European Union's rating outlook to Negative from Stable. The rating agency maintained triple-A rating of the European Union.

The downward revision reflects the negative outlooks now assigned to the Aaa sovereign ratings of key contributors to the EU budget, namely Germany, France, the U.K. and the Netherlands. These nations together account for around 45 percent of the EU's budget revenue.

Against the NZ dollar, the aussie hit a 4-day high of 1.2879, compared to an early low of 1.2830. The next resistance level for the aussie-kiwi pair is seen at 1.29. The pair closed yesterday's trading at 1.2855.

The aussie followed a similar trend against the yen, advancing to 80.53 after RBA decision. The next resistance level for the aussie-yen pair is likely seen at 81.00. At Monday's close, the pair was worth 80.22.

Looking ahead, Switzerland's second quarter GDP data is due shortly.

U.K. construction PMI for August and Eurozone PPI for July are scheduled for release in the European session.

From the U.S., ISM manufacturing for August and construction spending for July are expected in the New York morning session.

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