The Australian dollar erased yesterday’s gains today after the Reserve Bank of Australia left its benchmark interest rate unchanged and signaled that it’s content with the current level of borrowing costs.
Australia’s central bank maintained its cash rate target at 4.75 percent. The bank kept the rate unchanged since November 2010, when RBA raised the benchmark by 25 basis points.
This decision was expected by market participants. Yet the dovish stance of RBA Governor Glenn Stevens harmed the Australian currency nevertheless. The Governor said in his statement that the Bank expects “inflation will be close to target over the next 12 months” and that “the current mildly restrictive stance of monetary policy remained appropriate”.
AUD/USD fell to 1.0686 from 1.0711 as of 6:19 GMT today after jumping to 1.0755. EUR/AUD advanced to 1.3686 from 1.3602 and, while AUD/JPY traded near opening price of 85.79 after it earlier jumped to 86.28.
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