Forex Asia Review – Australian Dollar falls after RBA holds interest rates unchanged

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The Euro fell against the Dollar in Asian trading, from 1.4552 to 1.4464. Selling was mainly due to profit-taking rather than an aggressive sell-off, since there is no reason to sell the Single Currency ahead of the ECB rate hike on Thursday. There have recently been strong indications that the Bank will be tightening monetary policy. This interest rate differential will keep Euro above the Dollar, as the US Fed is unlikely to raise interest rates soon.



Cable opened the Asian session at 1.6080 and headed down ahead of important economic data from the UK later on. The Services PMI is predicted to decline, adding to the view that the British economy is still struggling to recover. Recently, the Bank of England has given indication that it will unlikely raise interest rates until next year. GBPUSD closed at 1.6034.



The Yen fell against the Dollar, as the greenback picked up momentum in Asian trading, lifting USDJPY to 81.09 from 80.69, mostly lifted by sovereign buying and Japanese importers buying up the cheaper Dollar. Other JPY crosses traded flat, especially EURJPY and AUDJPY. Investors are unsure of the Yen, since the Japanese economy has been struggling to recover after the devastating March earthquake affected factories and manufacturing.



The Australian Dollar fell following the announcement from the Reserve Bank of Australia (RBA) that it held its benchmark interest rate unchanged at 4.75 percent. AUDUSD began declining much before the news, since early in the session, from a high of 1.0746 down to 1.0663. The rate was in line with expectations, however, the RBA statement was not very hawkish on growth outlook, citing that the economy will unlikely grow as strong for the rest of the year as had previously been expected.



Gold traded in a range for most of the Asian session after having been rising since Friday. The safe haven investment reached six-week lows on Friday as fears of a Greek default eased after a successful vote on austerity measures. After being lifted by investors buying on dips and news of the S&P warning on Greece, a sell-off began towards the end of the Asian session after the RBA announcement that rates remain unchanged. Spot gold fell from $1,497.88 to $1,494.53.




(22:00 GMT)

1.4538 80.77 1.6080 1.0730 1495.89
DAY’S HIGH 1.4552 81.09 1.6098 1.0746 1497.88
DAY’S LOW 1.4464 80.69 1.6028 1.0663 1493.99

(06:00 GMT)

1.4467 81.06 1.6034 1.0671 1494.63

Note: Daylight Saving Time is in effect for GMT