The Australian dollar appreciated against its major counterparts in the Asian session on Tuesday, as the Reserve Bank of Australia lifted its key interest rate by 25 basis points and signalled further interest rate hikes to combat high inflation.
The policy board of the RBA, headed by Governor Philip Lowe, decided to increase the cash rate target by 25 basis points to 3.10 percent.
The board reiterated that it expects to increase interest rates further over the period ahead, but it is not on a pre-set course.
The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labor market, the bank repeated.
“The path to achieving the needed decline in inflation and achieving a soft landing for the economy remains a narrow one,” Governor Philip Lowe said.
The currency showed mixed trading against its major counterparts on Monday. While it fell against the greenback and the euro, it held steady against the kiwi. Versus the yen, it rose.
The AUD/JPY pair climbed to 92.24 from yesterday’s close of 91.60. Should the aussie strengthens further, it is likely to test resistance around the 94.00 region.
The AUD/USD pair rose to 0.6738 from Monday’s closing value of 0.6698. The aussie is seen facing resistance around the 0.69 area.
The AUD/CAD pair edged higher to 0.9155 from yesterday’s closing quote of 0.9100. Further rally in the currency may challenge resistance around the 0.94 level.
The aussie rebounded to 1.0636 against the kiwi, from nearly a 1-year low of 1.0562 logged at 10:10 pm ET. The aussie had finished yesterday’s trading session at 1.0602 against the kiwi. Immediate resistance for the aussie is likely seen around the 1.09 level.
The aussie was higher against the euro, at 1.5574. The euro-aussie pair was quoted at 1.5665 at Monday’s close. The aussie may face resistance around the 1.49 region, if it gains again.
Looking ahead, U.K. construction PMI for November will be released in the European session.
U.S. and Canadian trade data for October and Canada Ivey PMI for November will be out in the New York session.