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Australian Dollar Weakens After RBA Leaves Rate Unchanged

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The Australian dollar declined against its major opponents in the Asian session on Tuesday, after the Reserve Bank of Australia put its cash rate on hold at a record low for the 16th meeting.

The board of the Reserve Bank of Australia, governed by Philip Lowe, maintained the cash rate at 1.50 percent. The bank had reduced the rate by 25-basis points each in August and May last year.

The bank noted that the low level of interest rates is continuing to support the Australian economy.

The bank's forecast for the Australian economy is for GDP growth to pick up, to average a bit above 3 percent over the next couple of years.

Disappointing data on domestic retail sales and trade as well as weak global cues also weighed on the currency.

The statistical office reported that retail sales decreased a seasonally adjusted 0.5 percent monthly in December, reversing a 1.3 percent rise in the prior month. That was above the 0.2 percent fall economists had forecast.

Separate data showed that Australia's foreign trade balance turned to a deficit in December from a surplus in the previous month.

The seasonally adjusted trade balance came in at a deficit of A$1.36 billion in December versus a revised surplus of A$36 million in November.

Economists had expected a surplus of A$200 million.

The aussie showed mixed trading against its major opponents on Monday. While it fell against the greenback and the yen, it held steady against the euro and the kiwi.

The aussie dropped to 1.5768 against the euro, its lowest since December 2017, and was down by 0.5 percent from Monday's closing value of 1.5692. The aussie is seen finding support around the 1.60 level.

The aussie lost 0.5 percent to near a 4-week low of 0.7840 against the greenback, compared to 0.7876 hit late New York Monday. The aussie may challenge support around the 0.76 region.

The aussie fell to 1.0763 against the kiwi, a level unseen since August 2017. This marks a 0.7 percent depreciation from Monday's closing quote of 1.0840. On the downside, 1.06 is possibly seen as the next support level for the aussie.

The aussie slipped to near a 2-month low of 85.08 against the Japanese yen, after advancing to 86.21 at 7:15 pm ET. Continuation of the aussie's downtrend may see it challenging support around the 84.00 area.

The aussie edged down to 0.9840 against the loonie, reversing from a high of 0.9885 seen at 9:00 pm ET. Next key support for the aussie may be possibly seen around the 0.97 level.

Looking ahead, at 2:00 am ET, German factory orders for December are due.

German construction PMI for January and retail PMI reports from major European economies are set for release in the European session.

In the New York session, U.S. and Canadian trade data for December and Canada Ivey PMI for January will be out.

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