The Australian dollar fell against most of its major counterparts after the Reserve Bank of Australia left its benchmark rate unchanged at 4.25 percent. Although this was expected, the central bank had a dovish tone and signalled a willingness to ease policy further. AUDUSD fell to 1.0388 from a session high of 1.0463.
Yen strengthened against the dollar for a second day mainly due to repositioning by large hedge funds. According to the Commodity Futures Trading Commission, the number of shorts on dollar-yen and other JPY crosses increased substantially compared to last week, the most since July 2007. USDJPY fell to 81.54 from Monday’s high of 83.29. EURJPY dropped to 108.67 from 111.12 yesterday.
EURUSD continued to bounce in the Asian session, clawing back losses after a sharp declined due to weak European manufacturing PMI data yesterday. The good PMI numbers from the U.S. subsequently helped lift market sentiment. EURUSD opened in Asia at 1.3318 and proceeded to a 1.3354 session high.
GBPUSD stayed close to the 4-1/2 month high reached on Monday after strong UK manufacturing PMI. Resistance was met at 1.6045.
Looking ahead, on the economic calendar today, final eurozone quarterly GDP is due, along with UK Construction PMI. Later in the U.S. session, FOMC meeting minutes will be released by the Fed.