The Australian dollar tumbled by some 100 pips after the Reserve Bank of Australia announced it cut interest rates by 50 basis points, which was a little more than markets had expected. The RBA brought the key cash rate down to 3.75 percent, for reasons of inflation and disappointing economic growth. AUDUSD dropped to 1.0316 from 1.0413 after the news.
Euro held up reasonably well despite a firmer dollar overnight. EURUSD opened in Asia at 1.3237 and edged higher to a session high of 1.3258. The pair is expected to trade in a range for the rest of the week due to upcoming key risk events. The European Central Bank policy meeting on Thursday will be in focus. Also we have the second round of the French presidential vote as well as elections for a new Greek parliament next weekend. On Friday there is the key non-farm payroll jobs report from the US.
GBPUSD traded a very tight range in Asia between 1.6220 and 1.6239. After reaching an eight-month high yesterday, the pair consolidated gains. UK data on Manufacturing PMI due later today will be in focus.
USDJPY consolidated losses after a sharp drop on Monday to 79.72 following weak US data on Chicago PMI . Pre-European session open saw a further dip to 79.66, the lowest level since February 21. Yen is expected to benefit from safe-haven demand while the dollar is likely to come under more pressure if the upcoming US jobs numbers on Friday are disappointing. In the nearer-term, US data due today are from the Institute for Supply Management factory index.
EURJPY retraced slightly in Asia after falling to a two-week low of 105.45 in the US session. The pair tracked the bounce in euro which rose across the board in light Asian trading. Alot of markets were closed for a public holiday this Tuesday May 1st.