Australian Dollar Falls As RBA Keeps Rate Unchanged

(RTTNews) - The Australian dollar weakened against other major currencies in the late Asian session on Tuesday, after Australia's central bank left its benchmark interest rate unchanged for the third straight meeting held today, as widely expected.

The policy board of the Reserve Bank of Australia, led by Governor Philip Lowe, decided to hold the cash rate target at 4.10 percent. The interest rate paid on Exchange Settlement balances was kept unchanged at 4.00 percent. Today's decision to retain the rate will provide further time to assess the impact of past tightening and the economic outlook.

The bank expects inflation to return to the 2-3 percent target range in late 2025.

The Asian shares also traded lower, as investors reacted positively to data that showed China's services sector growth slowing to an eight-month low in August. However, announcement of new stimulus measures in China helped limit the downside.

China's top economic planner said it would establish a designated department to bolster the country's faltering private economy. Embattled Chinese property giant Country Garden has also reportedly averted the threat of a possible default.

Traders also looked ahead to monetary policy decisions of major central banks, including the U.S. Federal Reserve, Bank of England and the European Central Bank.

In the Asian trading today, the Australian dollar fell to a 1-week low of 0.6417 against the U.S. dollar and a 5-day low of 1.6814 against the euro, from yesterday's closing quotes of 0.6458 and 1.6704, respectively. If the aussie extends its downtrend, it is likely to find support around 0.62 against the greenback and 1.72 against the euro.

Against the Canadian dollar and the yen, the aussie dropped to 4-day lows of 0.8738 and 94.13 from yesterday's closing quotes of 0.8776 and 94.59, respectively. The aussie may test support near 0.85 against the loonie and 92.00 against the yen.

The aussie edged down to 1.0849 against the NZ dollar, from Monday's closing value of 1.0870. On the downside, 1.07 is seen as the next support level for the aussie.

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

At 3:00 am ET, ECB President Christine Lagarde will Chair the panel "Central bank immunities and international sanctions" at the ECB Legal Conference 2023, in Frankfurt, Germany.

At 5:00 am ET, ECB Board member Edouard Fernandez-Bollo will Chair the panel "Filling the gaps: central banks, competent authorities and legislative frameworks" at the ECB Legal Conference 2023, in Frankfurt, Germany.

In the New York session, U.S. factory orders for July is slated for release.

At 8:30 am ET, ECB board member Isabel Schnabel will Chair the panel "Incorporation of environmental considerations in the supervision of prudential risks" at the ECB Legal Conference 2023, in Frankfurt, Germany.

At 10:30 am ET, Vice-President of the European Central Bank Luis de Guindos will Chair the panel "Monetary Sovereignty: meaning and implications" at the ECB Legal Conference 2023, in Frankfurt, Germany.