SYDNEY—The Australian dollar closed lower on Tuesday after the Reserve Bank of Australia (RBA) opted to hold the cash rate steady for its third consecutive monthly board meeting. At 1700 AEST, the Australian dollar was trading at 90.72 US cents, down from Friday's local close of 90.89 cents. Since 0700 AEST, the local unit traded between 91.39 US cents and 90.74 cents. The unit opened the domestic session at 91.38 cents, its highest start to a local trading day since it kicked off at 92.67 cents on May 4, according to IRESS data. Commonwealth Bank currency strategist Joseph Capurso said investors lost enthusiasm for the unit late in Tuesday's trading day after the RBA announced its decision to hold the cash rate at 4.5 per cent. "London trade opened, they saw the RBA hasn't done anything, saw the accompanying statement wasn't bullish and it knocked the Aussie dollar down half a cent," he said. August marked the third month meeting in a row the RBA board decided to leave the cash rate on hold. RBA governor Glenn Stevens said with global growth at around trend and inflation within the RBA's target band of two to three per cent, the decision not to pull the trigger was justified. But he warned inflation was expected to be at the top of the RBA's target band by the end of the year. The central bank adjusts its benchmark rate to keep inflation within its target band. "Through to mid-2011, underlying inflation is likely to be in the top half of the target zone, while CPI inflation will probably be just above 3 per cent for a few quarters due to the impact of the tax changes and increases in utilities prices," Mr Stevens said in the statement accompanying the decision. He also said global economic expansion had been uneven over the year to June 2010, with growth likely to be "somewhat lacklustre in the second half of 2010." At 1700 AEST, the Australian dollar was at 78.26 Japanese yen, down from Monday's close of 78.72 yen, and at 68.89 euro cents, down from 69.57 euro cents previously. The euro finished at 1.3169 US dollars, up from Monday's close of 1.3065 US dollars, and at 113.60 yen, up from 113.17 yen. The US dollar was at 86.27 Japanese yen, down from 86.62 previously. Meanwhile the Australian debt market closed stronger. At 1630 AEST on Tuesday, the yield on the Commonwealth Government April 2020 bond was 5.154 per cent, up from Monday's close of 5.026 per cent, while the May 2013 bond was at 4.560 per cent, slightly down from 4.564 per cent previously. On the Sydney Futures Exchange, the September 10-year bond futures contract was at 94.825, up from Monday's close of 94.770, while the September three-year bond futures contract was at 95.350, up from 95.320. The 90-day bank bill closed down at 4.72 per cent from 4.76 per cent previously, while the 180-day bank bill rate was steady at 4.89 per cent. The Australian Bureau of Statistics said retail trade rose by just 0.2 per cent in June while building approvals fell 3.3 per cent. Commonwealth Bank head of debt research Adam Donaldson said the economic data was quite soft relative to expectations and probably helped cement the idea that the Reserve Bank would have interest rates on hold for at least a few months.

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