The Australian dollar spiked higher against its major counterparts in the Asian session on Tuesday, as the Reserve Bank of Australia left its cash rate unchanged and said that the board wanted to see more evidence that inflation is picking up sustainably within its target range before raising interest rates.
The policy board of the RBA headed by Governor Philip Lowe decided to maintain its cash rate target at 0.10 percent.
Inflation has picked up and a further increase is expected, but growth in labor costs has been below rates that are likely to be consistent with inflation being sustainably at target, the bank noted.
Over coming months, important additional evidence will be available to the Board on both inflation and the evolution of labour costs, Lowe said.
The Board will assess this and other incoming information as its sets policy to support full employment in Australia and inflation outcomes consistent with the target.
The latest survey from S&P Global showed that Australia services sector continued to expand in March, albeit at a slower rate, with a services PMI score of 55.6.
That’s down from 57.4 in February, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction.
The currency rose against its key counterparts on Monday. It gained 0.6 percent against the greenback, 0.8 percent against the yen, 0.3 percent against the kiwi and 1.2 percent against the euro for the day.
The aussie advanced to its highest level since June 2021 against the greenback, at 0.7618. The pair had finished Monday’s deals at 0.7543. Next near term resistance for the aussie is likely seen around the 0.78 level.
The aussie climbed to an 8-day high of 93.48 against the yen, up from Monday’s close of 92.61. Further rise in the aussie may see resistance around the 96.00 area.
The latest survey from Jibun Bank showed that Japan services sector continued to contract in March, albeit at a slower rate, with a services PMI score of 49.4.
That’s up from 44.2 in February, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction.
The aussie firmed to 1.4391 against the euro, a level unseen since April 2017. The euro-aussie pair was quoted at 1.4539 at Monday’s close. Next immediate resistance for the aussie is likely seen around the 1.41 level.
The aussie was up against the kiwi, at over a 1-year high of 1.0910. The aussie had finished yesterday’s trading session at 1.0854 against the kiwi. Should the aussie continues its uptrend, 1.12 is likely seen as its next resistance level.
The aussie was higher at 0.9515 against the loonie, which was its strongest level in nearly a year. At Monday’s close, the pair was worth 0.9413. The currency is seen finding resistance around the 0.98 region.
Looking ahead, PMI reports from major European economies are due in the European session.
U.S. and Canadian trade data for February and ISM non-manufacturing PMI for March will be released in the New York session.