Australian Dollar Falls On RBA's Less Hawkish Statement

australiandollar may07 02aug22 lt

The Australian dollar drifted lower against its major counterparts in the Asian session on Tuesday, after the Reserve Bank of Australia raised its key interest rate as expected and said that there is no pre-set path in the normalization of the monetary policy in the months ahead.

The policy board of the RBA, headed by Governor Philip Lowe, decided to lift the cash rate target by 50 basis points to 1.85 percent.

The bank also increased the interest rate on Exchange Settlement balances by 50 basis points to 1.75 percent.

Today's increase in interest rates is a further step in the normalization of monetary conditions in Australia, Lowe said.

The Board expects to take further steps in the process of normalizing monetary conditions over the months ahead, but it is not on a pre-set path.

The bank said the size and timing of future interest rate increases will be guided by the incoming data and the Board's assessment of the outlook for inflation and the labor market.

Data from the Australian Bureau of Statistics showed that Australia's home loans fell a seasonally adjusted 3.3 percent on month in June - coming in at A$20.50 billion.

That missed expectations for a decline of 3.0 percent following the 2.1 percent increase in May.

Asian stock markets are mostly lower, as U.S.-China tensions intensified ahead of House Speaker Nancy Pelosi's visit to Taiwan.

The aussie showed mixed trading against its major rivals on Monday. While it rose against the yen and the greenback, it dropped against the euro and the kiwi.

The aussie lost 1.5 percent against the yen, touching over a 2-month low of 90.78. The pair was valued at 92.38 when it ended trading on Monday. The aussie is seen finding support around the 87.5 mark.

The aussie touched a 4-day low of 0.6941 against the greenback, down by 1.1 percent from Monday's close of 0.7021. Next near term support for the aussie is likely seen around the 0.68 level.

The aussie fell 1.2 percent to 1.4772 against the euro, its lowest level since July 25. The euro-aussie pair was quoted at 1.4595 at Monday's close. Further fall in the aussie may find support around the 1.49 mark.

The aussie was lower by 0.6 percent against the kiwi, hitting a fresh 2-week low of 1.1024. The aussie had finished yesterday's trading session at 1.1092 against the kiwi. The aussie may face support around the 1.08 region, if it falls again.

The aussie weakened to a 4-day low of 0.8914 against the loonie, from a 6-week high of 0.9030 seen at 7:15 pm ET. At Monday's close, the pair was worth 0.9015. The aussie is likely to challenge support near the 0.88 mark.

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