Aussie held up well ahead of the Reserve Bank of Australia interest rate announcement as expectations were for rates to remain unchanged. AUDUSD opened in Asia at 1.0246 and hit a high of 1.0282 before steadying after the rate decision. RBA left the key rate at 3.5 percent as widely expected.
Euro stabilized against the dollar after falling yesterday on fading risk appetite. Soft U.S. economic data on manufacturing dampened sentiment. After Friday’s sharp rally in reaction to the EU Summit deal, the single currency has not taken a clear direction yet, partly because market participants are being cautious ahead of the ECB meeting on Thursday. The central bank is expected to cut its main interest rate in an effort to spur growth in the euro zone. EURUSD opened in Asia at 1.2573 near Monday’s lowest point and managed to edge up to 1.2606.
GBPUSD was little changed after opening the session at 1.5690. Sterling could come under pressure ahead of the Bank of England policy meeting on Thursday. There are expectations for a rate cut, and this could weigh on the British currency.
Dollar retraced losses made against the yen on Monday after the disappointing U.S. ISM data. USDJPY bounced to 79.80, up 0.6 percent from yesterday’s low. Meanwhile euro recovered some losses and climbed back above the key 100.00 level.
Looking ahead, market activity is expected to be relatively thin ahead of the Fourth of July U.S. holiday. Risk events on Thursday and Friday will likely keep investors cautious. We have ECB and BOE rate decision on Thursday and the U.S. NFP on Friday.