Tuesday, 2 August 2016

Forex - Aussie holds steady after RBA rate cut, kiwi moves higher

The Australian dollar was steady against its U.S. counterpart on Tuesday, after the Reserve Bank of Australia lowered interest rates to a new record-low, while the New Zealand dollar moved higher as sentiment on the greenback remained broadly under pressure.

AUD/USD was little changed at 0.7542, after hitting lows of 0.7492 earlier in the session.

The RBA lowered its benchmark interest rate from 1.75% to a new record-low of 1.50%, in line with expectations.

Speaking after the decision, RBA Governor Glenn Stevens said “recent data confirmed that inflation remains quite low.”

Market News

NZD/USD gained 0.45% to trade at 0.7204.

Meanwhile, sentiment on the greenback remained vulnerable after the advance read on second quarter U.S. gross domestic product showed on Friday a 1.2% annualized growth rate, well below expectations for 2.6%. First quarter GDP was revised lower to 0.8% from 1.1%.

The disappointing data lessened expectations for an early interest rate rise from the Federal Reserve.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.11% at 95.65, still close to Friday’s five-week lows of 95.33.


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