The Australian dollar surged today after the Reserve Bank of Australia decided to leave its cash rate without a change. Better-than-expected retail sales added to the strength of the rally.
The RBA left its main interest rate at 2.5 percent at today’s meeting, surprising many traders who have expected an interest rate cut. Still, the central bank retained its dovish bias as Governor Glenn Stevens reiterated:
Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target.
While market participants are still counting on an interest rate cut down the line, the absence of such a move in the present pushed the Australian dollar higher.
Macroeconomic fundamentals also lent help to the currency. Retail sales rose 0.7 percent in February, demonstrating a bigger increase than the predicted 0.4 percent.
AUD/USD rose from 0.7585 to 0.7641 as of 12:16 GMT today, reaching the high of 0.7710 intraday. AUD/JPY jumped from 90.66 to 91.83. EUR/AUD dropped from 1.4376 to 1.4200.
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