Australian Dollar Falls As RBA Leaves Key Rate Unchanged

(RTTNews) - The Australian dollar weakened against other major currencies in the Asian session on Tuesday, as Australia's central bank left its benchmark interest rate unchanged, in order to assess the impact of the past tightening on the economic activity.

The policy board of the Reserve Bank of Australia decided to hold the cash rate target unchanged at 4.10 percent. The bank was widely expected to hike the rate by a quarter point.

The interest rate paid on Exchange Settlement balances was kept unchanged at 4.00 percent.

The decision to pause the rate hike will provide further time to assess the impact of the increase in interest rates to date and the economic outlook, Governor Philip Lowe said.

Further, he said some further monetary policy tightening may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon the data and the evolving assessment of risks.

In economic news, data from Judo Bank showed that the manufacturing sector in Australia continued to contract in July, albeit at a slower rate, with a manufacturing PMI score of 49.6. That's up from 48.2 in June.

Also, data from the Australian Bureau of Statistics showed that the total number of building permits issued in Australia was down a seasonally adjusted 7.7 percent on month in June, coming in at 13,808. That beat expectations for a decline of 8.0 percent following the downwardly revised 20.5 percent increase in the previous month.

On a yearly basis, approvals fell 18.0 percent.

The total value of home loans in Australia was down a seasonally adjusted 1.0 percent on month and 18.2 percent on year in June, standing at A$24.60 billion.

Owner-occupied home loans were down 2.8 percent on month and 19.9 percent on year at A$15.91 billion, while investment lending rose 2.6 percent on month and shed 15.0 percent on year at A$8.69 billion.

In the Asian trading today, the Australian dollar fell to 95.08 against the yen and 1.6500 against the euro, from yesterday's closing quotes of 95.54 and 1.6363, respectively. If the aussie extends its downtrend, it is likely to find support around 91.00 against the yen and 1.67 against the euro.

Against the U.S., the New Zealand and the Canadian dollars, the aussie slipped to 0.6657, 1.0770 and 1.8808 from Monday's closing quotes of 0.6720, 1.0811 and 1.8856, respectively. The aussie may test support near 0.65 against the greenback, 1.06 against the kiwi and 1.86 against the loonie.

Meanwhile, the other antipodean currency, the NZ dollar also fell against its most major rivals after the RBA rate decision.

In economic news, data from Statistics New Zealand showed that the total number of building permits issued in New Zealand was up a seasonally adjusted 3.5 percent on month in June, coming in at 3,402.

That exceeded expectations for an increase of 0.3 percent following the 2.3 percent decline in May.

The NZ dollar fell to 0.6180 against the U.S. dollar and 1.7774 against the euro, from yesterday's closing quotes of 0.6208 and 1.7704, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.60 against the greenback and 1.81 against the euro.

Against the yen, the kiwi edged down to 8.17 from an early near 3-week high of 88.59. The kiwi may test support near the 84.00 region.

Looking ahead, German and Eurozone unemployment rate for July, PMI reports from different European countries and U.K. for July are due to be released in the European session.

In the New York session, PMI reports from U.S. and Canada for July are slated for release.