Australian Dollar Weakens On RBA's Downbeat Signal

(RTTNews) - The Australian dollar weakened against other major currencies in the Asian session on Tuesday, after the Reserve Bank of Australia monetary policy statement revealed some downbeat signals on the economy.

RBA Governor Philip Lowe said in a statement that growth in the Australian economy has slowed.

"The monthly CPI indicator suggests that inflation has peaked in Australia.", RBA Governor Lowe said.

Meanwhile, the policy board of the Reserve Bank of Australia decided to lift the cash rate target by 25 basis points to 3.60 percent. The interest rate on Exchange Settlement balances was also raised by 25 basis points to 3.50 percent.

In economic news, data from the the Australian Bureau of Statistics that the total value of retail sales in Australia was up a seasonally adjusted 1.9 percent on month in January, coming in at A$35.091 billion. That was in line with expectations following the 3.9 percent decline in December.

On a yearly basis, retail sales advanced 7.5 percent.

The ABS also said Australia posted a seasonally adjusted merchandise trade surplus of A$11.688 billion in January. That missed expectations for a surplus of A$12.500 billion and was down from A$12.237 billion in December.

Exports were up 1.4 percent on month to A$58.847 billion. Imports climbed 4.6 percent on month to A$47.160 billion.

Data from China's General Administration of Customs showed that the country's trade surplus expanded to $116.8 billion in February, following an increase of $78 billion in the previous month.

The Australian dollar was trading steady against its major rivals on Monday.

In the Asian session today, the Australian dollar fell to a 2-1/2-month low of 1.5964 against the euro and more than a 3-week low of 91.06 against the yen, from yesterday's closing quotes of 1.5865 and 91.42, respectively. If the aussie extends its downtrend, it is likely to find support around 1.62 against the euro, and 89.00 against the yen.

Against the U.S., the Canada and the New Zealand dollars, the aussie dropped to more than a 2-month low of 0.6693, an 8-day low of 0.9115, and a 5-day low of 1.0801 from yesterday's closing values of 0.6729, 0.9159 and 1.0855, respectively. The aussie may find support around 0.66 against the greenback, 0.89 against the loonie, and 1.07 against the kiwi.

Looking ahead, Swiss unemployment reports for February is slated for release at 1:45 am ET.

U.K. Halifax house price index for February and German factory orders for January are due to be released at 2:00 am ET.

At 10:00 am ET, Federal Reserve Chair Jerome Powell will testify on the economic outlook and recent monetary policy actions before the Joint Economic Committee, in Washington DC.