Australian Dollar Falls As RBA Keeps Key Rate Unchanged

(RTTNews) - The Australian dollar weakened against other major currencies in the Asian session on Tuesday, after the Reserve Bank of Australia or the RBA left its benchmark interest rate unchanged, as widely expected.

The policy board, governed by Michele Bullock, unanimously decided to hold the cash rate target at 4.35 percent.

The bank had lifted the policy rate by 25 basis points each in February, March and May.

The board observed that inflation is not expected to return to around the midpoint of the target range until late 2027 and there are upside risks to this projection.

Additionally, the RBA Governor confirmed that the domestic economy is running "above capacity", and that slowing economic growth will be necessary to control inflationary pressures.

Asian stock markets traded lower on continuing concerns over the conflict in the Middle East and the resulting spike in crude oil prices. Iran has warned it will not reopen the Strait of Hormuz unless the U.S. meets a series of preconditions, including compensation, the lifting of sanctions, and an end to military threats.

Traders may also have been reluctant to make significant moves ahead of the release of key U.S. inflation data in the coming days.

In the Asian trading today, the Australian dollar fell to a 4-day low of 0.7039 against the U.S. dollar, nearly a 2-week low of 0.9810 against the Canadian dollar and a 6-day low of 1.1951 against the NZ dollar, from yesterday's closing quotes of 0.7055, 0.9830 and 1.1984, respectively. If the aussie extends its downtrend, it is likely to find support around 0.69 against the greenback, 0.97 against the loonie and 1.18 against the kiwi.

Against the yen and the euro, the aussie edged down to 112.09 and 1.6399 from Monday's closing quotes of 1.1984 and 112.29, respectively. The aussie may test support near 110.00 against the yen and 1.65 against the euro.

Looking ahead, U.S. ADP weekly employment data, U.S. Redbook report and U.S. existing home sales for July are slated for release in the New York session.