The Australian dollar was trading above the opening level today after the Reserve Bank of Australia surprised the market by refusing to cut its main interest rate. Coupled with good macroeconomic reports, fundamentals looked very positive for the Aussie.
The RBA left its key cash rate at 2.25 percent at today’s policy meeting while the majority of market analysts expected a decrease by 25 basis points. The central bank explained its decision:
At todayâs meeting the Board judged that, having eased monetary policy at the previous meeting, it was appropriate to hold interest rates steady for the time being.
At the same time, the statement signaled that a rate cut is not out of question:
Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target.
For now though, traders focused on the immediate future, and the absence of an interest rate cut made the Aussie more attractive for them. Positive macroeconomic indicators, including rising building permits, made the Australian currency even more appealing.
AUD/USD edged up from 0.7764 to 0.7805 as of 17:09 GMT today. EUR/AUD dropped from 1.4396 to 1.4299, trading near the lowest level since January 29. AUD/JPY advanced from 93.28 to 93.65.
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