Australian dollar under pressure as RBA holds for another month

SYDNEY: The Australian dollar was under pressure on Tuesday after the country’s central bank left interest rates unchanged, while a warning that further tightening might yet be needed did little to narrow the currency’s yield deficit against the US dollar.

The Aussie was off 0.3% at $0.6344, extending a 1.1% slide on Monday. The retreat threatened support at the recent 11-month low of $0.6332.

The kiwi dollar eased 0.3% to $0.5925, having lost 0.8% the previous session. It has chart support around $0.5900.

The Reserve Bank of Australia (RBA) kept rates at 4.1% after its monthly policy meeting, saying recent economic data were consistent with inflation slowing as desired.

There had been some speculation newly promoted governor Michele Bullock might sound more hawkish on inflation, but the statement was much like the one from last month.

“The RBA board has opted for a strong sense of continuity in its communications,” noted Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia.

“The economy has outperformed expectations to date, but is slowing appreciably,” he added. “Upside risks to inflation continue to cloud the outlook, but with the full impact of rate hikes yet to be felt, we expect the RBA will keep rates on hold for the next year.”