The Australian dollar rallied on Tuesday after the monetary policy meeting of the Reserve Bank of Australia. As of now, the currency has come off the day’s highs, possibly being under pressure from poor economic data from China.
The RBA kept its main interest rate at 1.5% and issued a neutral statement, in line with market expectations. The bank said that “forecasts for the Australian economy are little changed.” As usually, RBA Governor Philip Lowe warned about dangers of a strengthening currency:
The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment.
The Caixin China Manufacturing PMI slumped from 51.2 in March to 50.3 in April instead of rising to 51.4 as analysts had predicted. The report was rather pessimistic overall, saying:
The downward pressure on manufacturing gradually emerged in April, with all indicators weakening. The Chinese economy may be starting to embrace a downward trend in the near term as prices of industrial products decline and active restocking comes to an end.
AUD/USD traded at about 0.7533 as of 8:49 GMT today after opening at 0.7524 and rising to the session high of 0.7556. EUR/AUD was close to its opening of 1.4479. AUD/JPY was up from 84.13 to 84.46, trading near the highest level since April 3.
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