The Australian Dollar declined on Tuesday after the Reserve Bank of Australia (RBA) held interest rates steady.
The central bank left the cash rate unchanged at 3.6%, ending a run of 10 consecutive hikes as policymakers said more time was required to “assess the impact of the increase in interest rates to date and the economic outlook.”
The Aussie edged down 0.4% following the RBA’s decision and at the time of writing was down 0.3% at $0.6766, Reuters reports.
“(The RBA) seem content that inflation has peaked and opted to not pull the hiking trigger ahead of the quarterly inflation report in a few weeks,” according to a senior market analyst at City Index, Matt Simpson.
“Unless the RBA are presented with a surprise uptick on the quarterly inflation print, I think the RBA will be happy to sit with 3.6% for the next two to three months.”
In addition, in the wider market, the Dollar regained some lost ground in Asian trading, fuelled by data indicating a further slowdown of the US economy.
The findings by the Institute for Supply Management (ISM) showed manufacturing activity declined to the lowest in almost three years. This drove down the Dollar, tracking a fall in US Treasury yields.
Furthermore, the Sterling hit $1.2471, the highest since June last year, and at the time of writing, was just below that mark, a 0.4% rise on the day, and the Euro reached $1.0938, the highest since early February, and was last up 0.17% at $1.0921.
Whereas the New Zealand Dollar edged up 0.2% to $0.6310, the highest since mid-February, and last stood at $0.6301.
The US Dollar index – measuring the greenback against major rivals – increased 0.17% to 102.20.
Whilst against the Japanese Yen, the Dollar increased 0.29% to 132.84.
“The ISM manufacturing report for March was a dud,” according to Wells Fargo economists. “The closest thing we get to good news in (the) report is that the slowing in the factory sector is pushing prices lower, and supply chains are continuing to heal, benefiting from the slack.
“Beyond that, the rest of the themes were those that often precede an economic recession.”