The Australian dollar recorded a weak trading session on Tuesday as it dropped against most top currencies following a cautious stance by the Reserve Bank of Australia (RBA) over raising interest rates.
However, the single currency did not suffer significant losses thanks to the improving sentiment in the financial markets, following a healthy rebound in US stocks overnight. Among the top currencies, the US dollar exhibited the most weakness as it erased most of its recent gains while the Japanese yen headed lower.
The euro has proven to be the strongest currency this week as investors pour funds into the EUR against other currencies, especially the British pound, and Swiss franc.
On the technical front, the greenback has yet to show any sign of a trend reversal, despite bearish ease off.
In the Asian market, Nikkei trades up by 0.28% as the Japan 10-year JGB yield climbs by 0.0015 to 0.177. Meanwhile, Hong Kong, China, and Singapore currently celebrate the Lunar New Year holiday, giving the Asian market a quiet tone over the coming week. Furthermore, US equity markets climbed overnight, with the DOW J, S&P 500, and NASDAQ jumping by 1.17%, 1.89%, and 3.41%, respectively.
Australian Central Bank to Leave Rates Unchanged Until Inflation Comes Under Control Again
Meanwhile, the RBA left the cash rate target unchanged at 0.10% today, reiterating that it “will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range.” The Australian bank added that it is “too early to conclude that it is sustainably within the target band” and that “the Board is prepared to be patient as it monitors how the various factors affecting inflation in Australia evolve.”
The RBA also revealed that it would halt all asset purchase programs after February 10.
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