The Australian dollar rose sharply against its major trading partners in the Asian session on Tuesday after Australia’s central bank kept its benchmark interest rate at historic lows and raised its forecast for economic growth, boosted by a robust recovery in economic activity.
The Reserve Bank of Australia’s Political Council, led by Governor Philip Lowe, has decided to keep its money rate unchanged at a record low of 0.10 percent.
The central bank maintained its target yield on Australia’s three-year government bonds at around 0.1 percent, and retained the parameters of the urgent financing facility and government bond purchase program.
The bank reiterated that it will not raise the money rate until actual inflation is stable within the target range of 2-3 percent.
This requires the labor market to be tense enough to ensure wage growth, which will be significantly higher than at present, the bank said. It is unlikely that this will happen until 2024.
The RBA raised its forecasts for economic growth to 4.75 percent in 2021 and 3.50 percent in 2022.
Data from the Australian Bureau of Statistics showed that Australia reported a seasonally adjusted trade surplus of A $ 5.574 billion in March.
This fell short of expectations for an A $ 8 billion surplus after an upwardly revised A $ 7.595 billion surplus in February.
Separate data showed that Australian mortgages rose at a seasonally adjusted 3.3 percent in March from the previous month to A $ 22.4 billion.
This follows a 1.8% fall in February.
Asian stock markets are trading mixed after mixed signals from Wall Street the day before, as traders remain concerned about the pace of global economic recovery amid renewed spike in coronavirus cases in a region with restrictions and lockdowns in several areas.
The Australian dollar rose on Monday amid continued optimism about the economic outlook after the release of positive data.
The Australian dollar added 0.3 percent to hit an 8-day high of 1.0799 against the kiwi. The AUD / NZD pair closed Monday’s trading at 1.0768. A further rally could lead the Aussie to resistance around 1.09.
The Australian dollar rose 0.3 percent to 84.74 against the yen after falling to 84.49 at 10:45 pm ET. At the close of trading on Monday, the pair was valued at 84.60. Immediate resistance for the Aussie is expected at 88.00.
The Australian dollar strengthened to a 1-week high of 1.5528 against the euro, up 0.04% from Monday’s close of 1.5534. Further gains in the currency could challenge resistance around 1.49.
On the other hand, the aussie fell to 0.9510 against the loonie after peaking at 0.9531 at 5:30 pm ET. At the close on Monday, the pair was at 0.9522. On the other hand, the next support level is at 0.93.
The aussie fell to 0.7735 against the dollar amid optimistic comments from Fed Chairman Jerome Powell on the economy. The Australian dollar closed yesterday’s trading session at 0.7758 against the US dollar. The Australian dollar is expected to find support around the 0.75 level.
In today’s European session, UK Manufacturing PMI data for April and approved mortgages for March will be released.
US and Canadian trade data, Canadian building permits and US manufacturing orders for March will be released at the New York session.
The material is provided by InstaForex – www.instaforex.com.