The Australian Dollar has rallied to a weekly high against the Pound and other major currencies after the Reserve Bank of Australia chose to maintain interest rates unchanged at the record low level of 2.5% and seemingly ruled out any further cuts in the near future.
“The main surprise was that the RBA didn’t reinsert the definitive easing bias into this statement after stressing it in the minutes of their August meeting, The ‘Aussie’ may rally a little as a result” said Richard Grace, the chief currency strategist at Commonwealth Bank of Australia.
Early on in Tuesday’s session the ‘Aussie’ softened after separate reports showed that retail sales grew less than expected and the nation’s current-account deficit came in wider than expected. Retail sales in the country grew by 0.1% in August, better than the 0% recorded in July but worse than economist expectations of a rise of 0.4%. The current account deficit meanwhile expanded to -A$9.4 billion from the –A$8.51 billion recorded in the first quarter of the year.
The Central Bank chose to cut interest rates to 2.5% in August in a bid to stave off the impact of a reduction of investment as the long mining boom begins to slow. Investors saw another rate cut as unlikely this month due to the Federal elections taking place on the 6th of September.
“The ‘Aussie’ is rallying due to a small language change, as the market sees the removal of the scope line as a signal that they are done, it’s ironic as a higher ‘Aussie’ Dollar makes a cut more likely” said Matthew Johnson, strategist at UBS AG.
In a short statement that followed the RBA’s monthly policy meeting, the central bank reiterated its wish to see a lower local currency. The Australian Dollar has dropped 15% since April, bringing a much-needed boost to export earnings and lessening competitive pressure on manufacturing.
Current Exchange Australian Dollar (AUD) Rates
The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9024 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6849 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5792 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4599 <
The Pound Sterling /Australian Dollar Exchange Rate is currently in the region of: 1.7262 <
The New Zealand Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.8653 <
Correct as of 09:35 am GMT