The Australian dollar spiked higher against its major counterparts in the Asian session on Tuesday, as the Reserve Bank of Australia left its cash rate unchanged and scaled back the bond purchase program, reflecting a robust economic recovery.
The RBA maintained its record low cash rate and the three-year government bond yield target at 0.1 percent, as expected.
The central bank decided to retain the April 2024 bond as the bond for the 3-year yield target.
The board noted that the economic recovery in Australia is stronger than earlier estimated and is expected to continue in the coming months.
The central bank will continue its bond buying program when it ends in early September, but at a rate of $4 billion a week. It will run through mid November.
The RBA reiterated that it will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range. The bank’s central scenario for the economy is that this condition will not be met before 2024.
The aussie held steady against its major peers on Monday.
The aussie appreciated to an 8-day high of 0.7599 against the greenback, up 1 percent on the day. The pair had finished Monday’s deals at 0.7524. Next immediate resistance for the aussie is likely seen around the 0.79 level.
The aussie advanced to nearly a 2-week high of 84.19 against the yen, up from Monday’s closing quote of 83.48. Next near term resistance for the aussie is likely seen around the 87.5 level.
Data from the Ministry of Internal Affairs and Communications showed that Japan household spending rose 11.6 percent on year in May – coming in at 281,063 yen.
That beat forecasts for an increase of 10.9 percent following the 13.0 percent spike in April.
The aussie drifted higher to its strongest level since May 18 against the euro, at 1.5651. The euro-aussie pair was quoted at 1.5747 at Monday’s close. Further rise in the aussie may see resistance around the 1.52 area.
The Australian currency jumped to nearly a 2-week high of 0.9349 against the loonie, from yesterday’s close of 0.9284. Should the aussie continues its uptrend, 0.96 is likely seen as its next resistance level.
The aussie rebounded to 1.0726 against the kiwi, after touching 1.0663 at 12:40 am ET, which was its lowest level since June 1. The aussie had finished yesterday’s trading session at 1.0708 against the kiwi. The currency is seen finding resistance around the 1.10 region.
Looking ahead, Eurozone ZEW economic sentiment index for July and retail sales for May will be released in the European session.
U.S. ISM services PMI for June will be featured in the New York session.