Commodity currencies fell broadly on Tuesday after the Reserve Bank of Australia kept interest rates on hold and again left the door open for an easing should the economy weaken materially. A second day of falls for growth-linked units such as the Australian dollar and the kiwi - hit yesterday when China announced its lowest annual growth target in eight years - gave a broad boost to the yen, including against the US dollar.
But market participants noted there were many investors waiting to scoop up the greenback on any dips as they expect it to resume its rally on the Japanese unit. "The RBA decision was broadly in line with expectations, but we saw the yield on the two-year bond dip and that's what put the Aussie under some pressure," said Koji Fukaya, chief currency strategist at Credit Suisse in Tokyo. The Australian dollar slipped by around 0.4 percent to $1.0621. It hit a session trough of $1.0604 after triggering some stop-losses on the way south.
A drop below its February 23 low of $1.0597 would take it to the lowest level in about a month. The Aussie also shed 0.6 percent versus the yen, last fetching 86.37 yen. That saw the yen strengthen against the dollar which has retreated after failing to break above a nine-month high of 81.86 yen for a second time. It was last at 81.34, some 30 pips below late New York levels.
The euro stood at $1.3202, having slid as low as $1.3160 on Monday. Against the Aussie, it fetched A$1.2422 after climbing nearly 1 percent on Monday. It jumped 0.6 percent on the kiwi to NZ$1.6195. The euro was also supported by a rare piece of good news from Europe, where major Greek bondholders voiced their support for a deal that will more than halve the value of their holdings as their contribution to keeping the country afloat.