Australia's central bank left its cash rate unchanged at 4.35% on Tuesday, extending a pause as it weighs persistent inflation against signs of weaker economic activity. AUD/USD traded largely flat on the decision, as expected, while the U.S. dollar held steady ahead of Wednesday's inflation report.
Australia's central bank kept its cash rate unchanged at 4.35% on Tuesday, extending a pause as it weighs persistent inflation against signs of a slowing economy. The Australian dollar's AUD/USD pair traded largely flat on the decision, as expected.
RBA holds as inflation eases toward target
The RBA has raised rates three times this year to contain inflation, which remained above its 2%-3% target. Inflation eased to 3.8% in June, even as second-quarter underlying price growth undershot forecasts, which reduced pressure for another rate hike.
According to the RBA's statement: "increasing the cash rate target further if upside risks materialise".
Dollar holds ahead of U.S. inflation data
The US Dollar Index traded unchanged at 99.84 by 03:08 ET, after rising 0.3% in the prior session. The greenback has stayed under pressure since July payrolls unexpectedly fell by 23,000, versus expectations for an 80,000 increase.
Markets have since pared some long-dollar positions, though expectations for at least one Fed rate hike this year remain. Investors are now focused on Wednesday's U.S. consumer price data, followed by producer prices and retail sales, for fresh clues on whether inflation is cooling enough to alter the Fed's policy outlook.
Higher oil prices could also complicate the outlook for Asian currencies by reviving inflation concerns for energy-importing economies, as hopes for a U.S.-Iran agreement fade.
Source: Forex News
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