Aussie Slumps As RBA Unexpectedly Keeps Interest Rate At 3.75%
The Reserve Bank of Australia unexpectedly kept its benchmark interest rate unchanged at 3.75% on Tuesday. Following the announcement at 10:30 pm ET, the Aussie fell sharply against its major counterparts. The Aussie plunged to new multi-week lows against the currencies of Canada and New Zealand. Meanwhile, the Aussie dropped from 4-day highs against the US dollar, euro and the yen.
Economists were looking for an interest rate increase of 0.25%.
RBA Governor Glenn Stevens said the central bank took a waiting stance, with banks across the country choosing to raise interest rates more than the central bank’s benchmark rate.
“Lenders have generally raised rates a little more than the cash rate over recent months and most loan rates have risen by close to a percentage point. Since information about the early impact of those changes is still limited, the board judged it appropriate to hold a steady setting of monetary policy for the time being,” he said in a statement.
As of now, the Aussie is worth 0.9359 against the Canadian dollar, its lowest level since December 30, 2009. On the downside, 0.920 is seen as the next target level for the Australian currency. At yesterday’s close, the aussie-loonie pair was quoted at 0.9464.
Against the currency of New Zealand, the Aussie is currently trading near a 3-week low of 1.2467. This may be compared to yesterday’s close of 1.2591. If the Aussie weakens further, it may target the 1.234 level.
At 10:55 pm ET, the Aussie touched 0.880 against the US currency and 79.79 against the yen, falling from 4-day highs of 0.8929 and 81.18, hit respectively at 10:25 pm ET. The next downside target level for the Aussie is seen at 79.4 against the yen and 0.879 against the greenback. The aussie-greenback pair closed trading at 0.8916 and the aussie-yen pair at 80.81 on Monday.
The Aussie that reached a 4-day high of 1.5598 against the euro at 10:25 pm ET lost ground thereafter and the pair is now trading at 1.5786. On the downside, 1.582 is seen as the next target level for the aussie. The euro-aussie pair was worth 1.5636 at yesterday’s New York session close.
The German retail sales and the Euro-zone PPI – both for the month of December are expected in the European session today.
The U.S. pending home sales for December has been slated for release at 10:00 am ET.
