The Aussie dollar came under renewed pressure on Tuesday after a cautious Australian central bank left the door wide open for a rate cut in May, sparking a jump in bond futures. The Australian dollar gave up hardly fought gains and fell to $1.0402, having briefly climbed to $1.0470 in a choppy session.
The Reserve Bank of Australia (RBA) held rates steady at 4.25 percent at its monthly review but said it wanted to see coming inflation data before deciding whether to ease policy at its May 1 meeting. "Rarely does the RBA signal this clearly an intention to cut rates at its next opportunity, barring surprises in data over the coming month," said Greg Gibbs, a strategist at Royal Bank of Scotland. The New Zealand dollar was flat on the day at $0.8235, erasing slight gains made in earlier trade. Given a lack of major economic data or events, intraday moves in the kiwi were driven by losses in the Aussie.
The kiwi hovered just below technical resistance at $0.8245, its 55-day MA. It struggled to vault above that level for much of March, and a daily close below that on Tuesday would signal the possibility of more losses. The kiwi edged up against the broadly weak Aussie, which fell 0.2 percent to NZ$1.2615, closing in on a six-month low around NZ$1.2600 hit late last week.
The key consumer price report for the first quarter is due on April 24 and is generally expected to show underlying inflation remained comfortably within the RBA's long-term target band of 2 to 3 percent. April interbank futures eased as the market had priced in around a one-in-three probability of a cut at this meeting. But investors are still almost fully priced for a move in May with that contract implying an 80 percent chance.