Aussie Drops After RBA Statement, Ignores Strong Retail Sales

The Australian dollar fell against its most-traded counterparts after the Reserve Bank of Australia released its monetary policy statement today. Better-than-expected retail sales data was unable to help the currency.

The RBA kept its key interest rate at 1.5% at today’s policy meeting. While such decision was widely expected by market participants, they were disappointed that Australia’s central bank did not join other central banks in shifting into more hawkish stance. Banks such as the European Central Bank, the Bank of England, and the Bank of Canada signaled that the era of extra loose monetary policy is coming to an end. Yet the RBA maintained its neutral stance, giving no signs that it is considering to raise interest rates in the near future.

Australia’s retail sales rose 0.6% in May from the prior month, exceeding the median forecast of 0.2%. Yet traders did not pay attention to the positive report, concentrating on the RBA statement instead.

AUD/USD dropped from 0.7658 to 0.7606 as of 12:05 GMT today. EUR/AUD rallied from 1.4829 to 1.4922. AUD/JPY declined from 86.82 to 86.13, touching the low of 85.84 intraday.

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