The Australian dollar spiked higher against other major currencies in Asian trading on Tuesday after the country's central bank decided to retain its interest rate at 4.25 percent, defying expectations for a 25 basis points rate cut.
In a statement, Reserve Bank governor Glenn Stevens said inflation and economic growth was close to average after the two interest rate cuts ordered late last year.
"The board noted that interest rates have declined to be close to their medium term average as a result of the actions at the board's previous two meetings," Mr Stevens said.
"With growth expected to be close to trend and inflation close to target the budget judged that the setting of monetary policy was appropriate for the moment. Should demand conditions weaken materially the inflation outlook would provide scope for easier monetary policy. The board will continue to monitor information on economic and financial conditions and adjust the cash rate as necessary to foster sustainable growth."
The Australian dollar jumped to a 6-month high of 1.0811 against the U.S. dollar, compared to yesterday's close of 1.0724. The next upside target level for the aussie-greenback pair is seen at 1.090.
The Australian dollar has been gaining against the US dollar since the beginning of this year and appreciated 5.8 percent thus far.
The Australian dollar that closed yesterday's trading at 82.10 against the Japanese yen rose to more than a 3-month high of 82.90. On the upside, 84.0 is seen as the next target level for the Australian currency.
The aussie-yen pair has advanced 4.2 percent thus far this year.
Against the European currency, the Australian dollar climbed to a fresh record high of 1.2153, up 0.8 percent from yesterday's close of 1.2252.
The euro is under selling pressure against the Aussie amid lingering debt crisis in the Eurozone. The euro has lost 4 percent against the aussie thus far this year.
The Australian dollar strengthened to a fresh multi-year high of 1.0762 against the Canadian dollar. If the aussie-loonie pair gains further, it may likely target the 1.10 level. The pair ended yesterday's trading at 1.0683.
The Australian dollar that declined to a 5-day low of 1.2841 against the New Zealand dollar in early Asian deals rebounded thereafter and gained 0.8 percent to hit a 1-week high of 1.2942 amid the RBA rate decision. The next upside target level for the aussie-kiwi pair is seen at 1.296.
Looking ahead, Japan will release the preliminary results of its leading and coincident indexes for December at 12 am ET.
French trade data for December, Swiss foreign currency reserves data for January and the German industrial production for December are expected in the European session.
Canada's building permits for December is due in the New York morning session.
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