The Australian dollar extended its early gains on Tuesday, as the country's central bank retained the cash rate unchanged at 3 percent, stating that earlier easing policies are having some of the desired impact.
The central bank has reduced cash rate six times since it started its easing cycle in November 2011.
"The Board's view is that with inflation likely to be consistent with the target, and with growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy is appropriate," the central bank said in a report.
However, the bank noted that the current inflation outlook would afford scope to ease policy further, should that be necessary to support demand.
Better-than-expected retail sales and current account data supported the Australian currency in the beginning of the session.
The retail sales report showed a better than expected 0.9 percent growth in retail sales. A separate report showed that Australia posted a seasonally adjusted current account deficit of A$14.678 billion in the fourth quarter of 2012, lesser than the deficit of A$15.3 billion forecast by economists.
The aussie is trading up 0.44 percent at 1.0243 against the greenback, setting a 4-day high. If the strength continues, the aussie may break the next upside target level at 1.03.
Against the euro, the aussie is worth 1.2729. This marks the highest level for the aussie since March 1. If the aussie rises further, it may target the 1.265 level. The pair ended Monday's deals at 1.2780.
The aussie rallied to a 4-day high of 1.0509 versus the loonie, appreciating 0.29 percent, and remains poised to test around 1.055 level. At yesterday's close, the pair was worth 1.0479.
The aussie that slipped to 95.07 against the yen immediately after the decision bounced back, and is currently trading at 95.39.
The aussie is presently worth 1.2354 against the NZ dollar, off its previous low of 1.2317. The aussie-kiwi pair traded 1.2322 at Monday's close.
In the European session, PMIs from major European economies and Eurozone retail sales for January are due.
The U.S. ISM non-manufacturing index for February is slated for release in the New York session.
by RTT Staff Writer
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