5:36 PM
The Australian dollar "flew" up
FXTM Online Analysis Department. www.fxtmonline.com
The AUD/USD pair rose sharply on Tuesday morning, when the RBA, contrary to expectations, left interest rates unchanged.
The Australian dollar weakened too much in recent days, to continue to update the record lows without an adjustment for a correction. The Reserve Bank of Australia at the April meeting decided to keep everything in its place: the interest rate remained at the level of 2.25% per annum despite the fact that the bidders were clearly counting on its decline.
In the follow-up comments the RBA noted that further easing of monetary policy is not excluded because export prices and index trading conditions within the country are falling. At the same time the cost of borrowing for businesses and consumers remains low, but for balanced growth a cheaper Australian dollar is needed.
Inflation will remain within the target marks in the next year or two, and economic growth in Australia is seen to be below the trend line.
Actually, all these statements will "have weight" later, but for now the investors are playing on the rates being kept unchanged. The RBA is known for its flexible monetary policy, so it will always have time to lower the rate. If it did not do it right now, it means that the situation in the economy is not so critical.
The Australian dollar weakened too much in recent days, to continue to update the record lows without an adjustment for a correction. The Reserve Bank of Australia at the April meeting decided to keep everything in its place: the interest rate remained at the level of 2.25% per annum despite the fact that the bidders were clearly counting on its decline.
In the follow-up comments the RBA noted that further easing of monetary policy is not excluded because export prices and index trading conditions within the country are falling. At the same time the cost of borrowing for businesses and consumers remains low, but for balanced growth a cheaper Australian dollar is needed.
Inflation will remain within the target marks in the next year or two, and economic growth in Australia is seen to be below the trend line.
Actually, all these statements will "have weight" later, but for now the investors are playing on the rates being kept unchanged. The RBA is known for its flexible monetary policy, so it will always have time to lower the rate. If it did not do it right now, it means that the situation in the economy is not so critical.
FXTM Online Analysis Department. www.fxtmonline.com
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