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Australian Dollar Climbs As RBA Leaves Cash Rate On Hold


The Australian dollar advanced against its key counterparts in the Asian session on Tuesday, as Australia's central bank held its key policy rate at a record low, saying extended period of loose policy stance would be required to help reduce unemployment and spur inflation.

The board of the Reserve Bank of Australia, governed by Philip Lowe, maintained the cash rate at a record low 1.00 percent, as widely expected.

The bank said it is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment and achieve more assured progress towards the inflation target.

"The Board will continue to monitor developments, including in the labor market, and ease monetary policy further if needed to support sustainable growth in the economy and the achievement of the inflation target over time," the bank stated.

Data from the Australian Bureau of Statistics showed that Australia's retail sales declined for the first time in three months in July. The retail sales dropped 0.1 percent on month in July, reversing a 0.4 percent rise in June.

Separate data showed that Australia's current account registered its first surplus in 44 years in the second quarter.

The current account surplus totaled A$5.85 billion in the June quarter versus a deficit of A$1.12 billion in the preceding quarter.

The aussie was lower on Monday as worries about trade issues intensified after a new round of tariffs by the U.S. and China took effect over the weekend. The currency shed 0.3 percent each against the greenback and the yen and 0.2 percent each against the euro and the kiwi for the day.

The aussie climbed to 1.0681 against the kiwi, up by 0.4 percent from a 5-day low of 1.0638 seen at 5:00 pm ET. The pair was valued at 1.0646 when it ended deals on Monday. The aussie is poised to find resistance around the 1.08 level.

Having fallen to an 8-day low of 71.09 against the yen at 11:30 pm ET, the aussie reversed direction and strengthened 0.4 percent to 71.38. Next immediate resistance for the aussie is seen around the 76.00 region.

Data from the Bank of Japan showed that Japan monetary base climbed 2.8 percent on year in August - coming in at 512.511 trillion yen. That follows the 3.7 percent increase in July.

The aussie bounced off to 0.6715 against the greenback, representing a 0.4 percent rise from a near 4-week low of 0.6688 it touched at 11:30 pm ET. The aussie had ended Monday's trading at 0.6716 against the greenback. Further upward trading of the aussie is likely to take it to a resistance around the 0.71 area.

The aussie was 0.4 percent higher at 0.8958 against the loonie, following a 4-day decline to 0.8924 at 11:30 pm ET. The pair was worth 0.8948 at Monday's close. Continuation of the aussie's uptrend may see it challenging resistance around the 0.92 level.

The aussie appreciated to 1.6285 against the euro, its strongest since August 2, marking a 0.4 percent gain from a low of 1.6351 seen at 11:30 pm ET. The euro-aussie pair had finished Monday's deals at 1.6330. Should the aussie rises further, it is likely to challenge resistance around the 1.60 level.

Looking ahead, Eurozone PPI for July is set for release in the European session.

U.S. construction spending for July and ISM manufacturing index for August will be featured in the New York session.

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