Australian Dollar Slips after RBA & Building Approvals

The Australian dollar fell today after the Reserve Bank of Australia stood pat, leaving monetary policy without change, and building approvals rose less than was expected.

The RBA kept its main interest rate at 1.5% as was widely expected. The central bank predicted that “the Australian economy will gradually pick up over the coming year,” but voiced concern about piling household debt and wage inflation, which remains low despite strong growth of employment. As for the exchange rate, the RBA stated:

The Australian dollar has appreciated since mid year, partly reflecting a lower US dollar. The higher exchange rate is expected to contribute to continued subdued price pressures in the economy. It is also weighing on the outlook for output and employment. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.

Building approvals rose 0.4% in August from July. That was a better reading than the 1.2% drop in the prior month but far worse than a 1.1% increase promised by analysts.

AUD/USD dropped from 0.7825 to 0.7812 as of 11:57 GMT today, touching the low of 0.7791 intraday that was the weakest reading since July 18. EUR/AUD climbed from 1.4985 to 1.5038. AUD/CHF declined from 0.7627 to 0.7612 after rallying to 0.7646 earlier.

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