Aussie Dollar Dips despite RBA Decision

By: Barbara Zigah

The Reserve Bank of Australia announced earlier that it would make no changes to its current interest rate, set at 4.25%, though it held on to the easing bias discovered with the most recent reading of the minutes. Commodity linked currencies fall broadly as a result with the Australian Dollar slipping against the U.S. Dollar by 0.4% to trade at $1.0612, and the New Zealand Dollar fell to $0.8133 at one point, but recovered to $0.0854. The Aussie and Kiwi were already under some pressure following the news yesterday that China lowered its annual growth rate to a level not seen in eight years.

The Australian Dollar also slipped against the safe haven Japanese Yen, touching on 86.45 Japanese Yen, a 0.6% decline. In turn, the Yen gained strength against the U.S. Dollar trading at point at 81.86 Yen before retreating to 81.39 Yen. One analyst said that that the Yen’s rise was not a worry for the Bank of Japan, however, as it was essentially profit taking; further, this week has quite a few economic events which will be capped off with the U.S. non-farms payroll release, all of which will likely bolster the U.S. Dollar’s uptrend. Since late January, when the Bank of Japan moved to weaken the currency, the U.S. Dollar has gained almost 7% against the Yen.