Singapore, April 4 (BNA): The Australian dollar fell today, Tuesday, after the central bank kept interest rates steady, while the dollar regained some of the gains it lost when data showed a decline in manufacturing activity in the United States.
In a closely watched monetary policy decision, the Reserve Bank of Australia (RBA) on Tuesday left the cash rate unchanged at 3.6%, snapping a streak of 10 consecutive hikes as policymakers said more time was needed to “assess the impact of an increase in monetary policy”. Interest rates to date and the economic outlook.
The Australian dollar fell as much as 0.4% following the decision and fell 0.3%, last at $0.6766.
“The RBA seems satisfied that inflation has peaked and opted not to pull the trigger before the quarterly inflation report comes out in a few weeks,” said Matt Simpson, senior market analyst at City Index.
“Unless the RBA gets a surprise boost in the quarterly inflation report, I think the RBA will be happy to sit with 3.6% for the next two to three months.”
In the broader market, the dollar regained some of its gains during the Asian trading session after Monday’s tumble, which was prompted by data pointing to a further slowdown in the US economy.
An Institute for Supply Management (ISM) survey on Monday showed that manufacturing activity fell to its lowest level in nearly three years in March as new orders continued to contract, with all subcomponents of the manufacturing PMI falling below the 50 threshold for the first time since. . 2009.
That sent the dollar broadly lower, tracking the slide in US Treasury yields, as investors lowered expectations about how long interest rates would need to stay in tight territory to tame inflation.
The British pound and the New Zealand dollar hit multi-week highs in early Asian trade on Tuesday, although they fell later.
Sterling was down 0.05%, most recently at $1.2410, after touching its highest since late January earlier in the session, at $1.2425.
The New Zealand dollar rose 0.2 percent to $0.6310, the highest level since mid-February, and last settled at $0.6301.
Against a basket of currencies, the US Dollar Index rose 0.17% to 102.20, reversing some of Monday’s drop of more than 0.5%.
“The ISM manufacturing report for March was useless,” said economists at Wells Fargo. “The closest thing we get to good news in the report is that a slowdown in the factory sector is driving prices down and supply chains are continuing to recover, benefiting from the recession.
“Beyond that, the remaining themes were those that often precede recessions.”
The euro fell 0.11% to $1.0891, after rising 0.56% on Monday. Against the Japanese yen, the dollar rose 0.29% to 132.84.
Futures pricing shows that markets expect the Federal Reserve to start cutting interest rates as early as September through the end of the year, with rates just above 4.3% by December.
The two-year Treasury yield, which is usually in line with interest rate expectations, was last at 3.9738%, after falling nearly 10 basis points on Monday.
Sluggish US economic data overshadowed renewed inflation fears after the OPEC+ group rattled markets with plans to cut more production, sending oil prices up 6% on Monday.
said Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank.
HF