RTTN:Australian Dollar Erases Losses As RBA Keeps Rate On Hold
The Australian dollar erased some of its early Asian session's losses against other major currencies after the Reserve Bank of Australia retained its cash rate unchanged at 2.75 percent on Tuesday.
Last month, the RBA slashed the rate to a record low of 2.75 percent and chances of further rating downgrade is in the offing as the central bank said it sees scope for further monetary easing. The decision was in line with economists' expectations.
At today's meeting, the Reserve Bank Board judged that the easier financial conditions now in place would contribute to a strengthening of growth over time.
According to a statement by Governor Glenn Stevens, the Board maintained the view that the current inflation outlook "may provide some scope for further easing, should that be required to support demand."
Earlier in the day, the Australian Bureau of Statistics posted a seasonally adjusted current account deficit of A$8.510 billion in the first three months of 2013. That beat forecasts for a shortfall of A$9 billion following the revised deficit of A$14.759 in the previous three months.
The aussie snapped back a little above the 0.9730 level against the greenback following the decision, from previous low of 0.9689. The aussie-greenback pair ended Monday's deals at 0.9766, slightly better performance overall following late May steep sell-offs.
The Australian dollar recovered from a low of 1.3475 against the euro reached immediately after the announcement. The euro-aussie pair was trading at 1.3433 around 2:50 am ET, compared to yesterday's closing quote of 1.3384.
The Australian currency staged a rebound to 97.26 against the yen following the rate decision from previous low of 96.60. As of 3:00 am ET, the aussie-yen pair was trading near Monday's closing value of 97.16.
In economic news from Japan, the Bank of Japan's monetary base spiked 31.6 percent to JPY 154.141 trillion on year in May. That followed the 23.1 percent annual increase in April.
The aussie moved in tight ranges against its New Zealand counterpart amid central bank's interest rate announcement, with the AUD/NZD pair moving between 1.2075 and 1.2044. At Monday's close, the pair was trading at 1.2060.
The aussie that dropped to 0.9976 against the Canadian dollar in early Tuesday Asian deals snapped back above parity following the RBA decision to hold the rate. At Monday's close, the currency cross was worth 1.0034.
Looking ahead, the Eurozone PPI for April is the lone major economic data due in the European session.
The trade reports from Canada and U.S. for the month of April are slated for release in the New York session.
