Posted on March 6, 2012 by Trading Point Investment Research Desk at 7:08 am GMT
The Australian dollar fell against the U.S. dollar after the Reserve Bank of Australia kept interest rates unchanged at 4.25 percent. Although this was expected, what weighed on the aussie was the fact that the RBA Governor Glenn Stevens did not indicate that he was backing away from the possibility of a future rate cut, leaving markets to believe that further easing could be possible should the economy weaken.
The Australian dollar has been falling against the greenback since early Monday losing over 1.3 percent. AUDUSD opened in Asia at 1.0668 and reached an early high of 1.03689 before tumbling to 1.0602. The aussie began its decline yesterday when China announced it has lowered its annual growth target to the lowest level in eight years. China is a major export market for Australia. The focus now turns to the Australian fourth quarter economic growth data due on Wednesday.
The euro has not shown any clear direction against the dollar yet this week. Uncertainty over the outcome of the Greek PSI this week is keeping the single currency capped from further advances. Greece though is hopeful that there will be a sufficient participation in the voluntary debt swap deal which concludes on Thursday. Once that hurdle is passed, the second bailout package can be released. This optimism is keeping the euro supported for now.
EURUSD has been range trading since yesterday between 1.3159 and 1.3240. Profit taking during the Asian session kept the pair on the downside.
Looking ahead, euro zone GDP data due later today should give more direction to the euro. Growth is forecast to fall 0.3 percent. If data comes in weaker, euro is expected to fall further today.
The dollar kept steady against the yen during the session. The sharp rally in USDJPY recently has resulted in an opportunity for profit taking, which has led the pair to ease of nine-month highs. a surprise Bank of Japan easing and Japan’s trading deficit has weakened the yen, and this is expected to weigh on the yen. USDJPY traded between 81.33/56 .
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