The Australian dollar was modestly higher against its key counterparts in the Asian session on Tuesday, after the Reserve Bank of Australia slashed its key interest rate by a quarter point for the second month in a row, taking it to a new record low.
The board of the Reserve Bank of Australia, governed by Philip Lowe, cut the cash rate to 1.00 percent from 1.25 percent. The bank had reduced its rate by 25 basis points in June.
“This easing of monetary policy will support employment growth and provide greater confidence that inflation will be consistent with the medium-term target,” the bank said in a statement.
Policymakers noted that the reduction will help make further inroads into the spare capacity in the economy.
The aussie was weaker against its major counterparts on Monday. It was down by 0.3 percent against the yen, 0.8 percent against the greenback, 0.1 percent against the euro and 0.2 percent against the kiwi for the day.
The aussie was 0.4 percent higher at 0.6986 against the greenback, following a drop to 0.6957 in the immediate aftermath of the decision. The pair was valued at 0.6964 when it closed deals on Monday. The currency is poised to target resistance around the 0.72 mark.
After sliding to a 4-day low of 75.39 against the yen soon after the announcement, the aussie bounced off 0.5 percent to 75.74. The aussie-yen pair had ended yesterday’s deals at 75.52. Should the aussie extends rise, it is likely to face resistance around the 77.5 level.
Data from the Bank of Japan showed that Japan monetary base rose 4.0 percent on year in June – coming in at 512.991 trillion yen. That follows the 3.6 percent increase in May.
The aussie added 0.4 percent to 1.6151 against the euro, recovering from a low of 1.6209 touched at 6:15 pm ET. At Monday’s New York session close, the pair was worth 1.6202. The aussie is seen finding resistance around the 1.60 region.
Following a 3-month low of 1.0425 seen quickly upon the release of the RBA statement, the aussie reversed its course, gaining 0.4 percent to 1.0464 against the kiwi. The aussie was trading at 1.0435 a kiwi at yesterday’s close. Further uptrend may take the aussie to a resistance around the 1.06 level.
Data from the Statistics New Zealand showed that New Zealand building permits surged a seasonally adjusted 13.2 percent on month in May- to 3,687. That follows the 8.0 percent contraction in April.
The aussie edged higher to 0.9170 against the loonie, up by 0.3 percent from a low of 0.9139 set immediately after the RBA release. The pair had finished deals at 0.9147 on Monday. Next key resistance for the aussie is possibly seen around the 0.935 mark.
Looking ahead, the U.K. construction PMI for June and Eurozone PPI for May will be featured in the European session.
The material has been provided by InstaForex Company – www.instaforex.com