In overnight trading, the AUDUSD fell after the Reserve Bank of Australia left interest rates unchanged. While the lack of a change to the interest rate was expected, Forex traders reacted to the central bank’s comments that "The Board’s view was also that were demand conditions to weaken materially, the inflation outlook would provide scope for easier monetary policy." Forex traders interpreted that statement that another cut is probably in the cards for the May meeting as inflation remains low. As a result, the AUDUSD fell to 1.0400 from an earlier high of 1.0460 before the news. The Aussie weakness was especially seen against its fellow commodity currencies with the AUDCAD falling to a 2012 low of 1.0280.
More on the RBA Meeting from the BrisbaneTimes
In his statement accompanying the rates decision, RBA governor Glenn Stevens made it clear the central bank is ready to cut interest rates again depending on the strength of March quarter inflation figures, scheduled for release on April 24, a week ahead of the next rates meeting.
"At today's meeting, the Board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy," Mr Stevens said.
"The Board’s view was also that were demand conditions to weaken materially, the inflation outlook would provide scope for easier monetary policy."
The dollar initially rallied on the RBA announcement, rising to $US1.047 from $1.0436 but fell to $US1.0396 as traders digested the RBA statement. It climbed back above $US1.04 in the minutes following the release. The local sharemarket slipped briefly into negative territory on the announcement. The ASX200 was recently at 4331.7, paring the day’s gains to 2.4 points or 0.1 per cent. Read More