The Australian dollar flip-flopped through the Asian morning Tuesday, reacting to Australian economic data initially and then to the Reserve Bank of Australia’s decision to cut its benchmark interest rate. Aussie-dollar started the Asian session with a slight rise to $1.0433 and then slipped to $1.0419 after a mixed bag of trade- and housing-related data from the Australian Bureau of Statistics. The data showed the number of dwelling units approved fell 7.6% month-on-month seasonally adjusted in October after a revised 6.2% rise in September (from +7.8% reported earlier. The outcome was lower than median consensus of a 2.0% decline and outside the range of -6.5% to +3.0% predicted by economists. The current account balance was in deficit of A$14.9 billion in the third quarter compared with a revised A$12.4 billion (from -A$11.8 billion) deficit in the second quarter. The outcome was close to median consensus for a deficit of A$14.8 billion. Aussie-dollar stabilized near $1.0425/30 as the market then sat back and waited for the RBA decision.
The RBA cut the cash rate to match a historic low Tuesday, saying a further easing in the monetary policy stance was appropriate and will help to foster sustainable growth in demand. The RBA lowered the cash rate by 25 basis points to 3.00% bringing it back to a level last seen in early October 2009. The decision had been expected by a majority of economists. Aussie-dollar reacted with only a brief dip to $1.0412 before bouncing quickly back and hitting a series of stop-loss buy orders above $1.0450, to trade a fresh morning high of $1.0458.
EasyForexNews Research Team