Australian Dollar Recovers After Losses on RBA Statement

The Australian dollar fell yesterday against the US dollar and the euro as the Reserve Bank of Australia kept its benchmark interest rate unchanged and the trade balance posted an unexpected deficit. The Aussie currently recovered against the greenback and attempts to rise against the euro, the currency also gained versus the Japanese yen.
The RBA decided yesterday to keep its cash rate unchanged at 4.75 percent, in line with the expectations of analysts. Bank’s Governor Glenn Stevens stated that the strong currency helped to control the inflation, reducing need for an increase of the interest rates. Stevens said in the statement:

Inflation is consistent with the medium-term objective of monetary policy, having declined significantly from its peak in 2008. These moderate outcomes are being assisted by the high level of the exchange rate, the earlier decline in wages growth and strong competition in some key markets, which have worked to offset large rises in utilities prices.

Australia’s trade balance posted a deficit of A$205 million in February. That’s compare to the median forecast of A$1.15 billion surplus and the January surplus of A$1.43 billion (revised down from A$1.88 billion). The number of home loan in Australia declined by 5.6 percent in February, while much smaller drop by 2.6 percent was expected by market participants.
AUD/USD traded today at 1.0364 as of 3:09 GMT after it dropped yesterday from 1.0363 to 1.0328. EUR/AUD traded at about 1.3753 after yesterday’s advance from 1.3719 to 1.3767. AUD/JPY jumped from 87.65 to 88.46, the highest level since September 2008.

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