The Australian dollar stepped back on Tuesday as the country's central bank signalled it would keep rates steady for some time while the New Zealand currency hit another six-month low as the greenback inched up amid hopes of easing global trade tensions. The Australian dollar was last at $0.7523 from a two-week high of $0.7568 touched on Friday.
The Reserve Bank of Australia (RBA) released minutes of its May policy meeting on Tuesday, which showed it saw scant reason to lift rates as inflation and wage growth remained subdued. The RBA inserted a new line in the minutes saying "it would be appropriate to hold the cash rate steady and for the Reserve Bank to be a source of stability and confidence."
In New Zealand, the kiwi dollar slipped 0.2 percent on Tuesday to $0.6897, a level not seen since mid-December. New Zealand government bonds eased, sending yields one basis point higher towards the long end of the curve. Australian government bond futures slipped, with the three-year bond contract down 4.5 ticks at 97.765. The 10-year contract dipped 5.5 ticks to 97.160.
Analysts said the RBA may be trying to signal a steady policy path at a time when the quasi-judicial Royal Commission inquiry was unearthing years of malpractice and criminal behaviour at the country's largest financial firms. "Housing credit, including availability and demand, remains a focus for the monetary authorities," economists at National Australia Bank said in a note. "Tomorrow's wage price index and Thursday's labour force will provide another update on the inflation and labour market outlook. We doubt that Q1 wages will be a compelling data point."
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