The Australian dollar trimmed its early gains against its key counterparts in Asian deals on Tuesday, as minutes from the Reserve Bank of Australia’s September meeting showed that downside risks to the economic outlook had increased from overseas developments, and RBA board felt that the country’s economy was still sluggish enough to warrant continued stimulus.
Lower resource exports and lagging commodity prices were weighing on the Australian economy, the board said, although the weakening Australian dollar is expected to help spur growth in the coming months.
“The depreciation of the Australian dollar in response to the significant declines in key commodity prices was also expected to support growth, particularly through a larger contribution from net service exports,” the minutes said.
Data from the Australian Bureau of Statistics showed that the total number of new motor vehicle sales in Australia was down a seasonally adjusted 1.6 percent on month in August, coming in at 94,332.
That follows the 1.3 percent monthly decline in July.
The Asian markets are trading mixed, ahead of key decisions on monetary policy by central banks in Japan and the U.S. Most economists expect the bank that the Federal Reserve may refrain from raising rates at the meeting, amid signs of slowdown in China’s growth and recent volatility in global markets.
The aussie was trading higher on Monday, as a rebound in commodity prices and a lower greenback raised the demand for the currency. The aussie was up by 0.47 percent against the kiwi, 0.39 percent against the yen, 0.65 percent against the greenback and 0.83 percent against the euro for the day.
In Asian trading now, the aussie eased back to 85.78 against the Japanese yen, reversing from an early 2-week high of 86.33. The aussie is seen finding support around the 84.00 level.
Pulling away from an early nearly 3-week high of 0.7166 against the greenback, the aussie edged down to 0.7123. The aussie is likely to find support around the 0.70 area. At Monday’s close, the pair was valued at 0.7137.
The aussie, having advanced to nearly 3-week high of 0.9496 against the loonie at 8:00 pm ET, retraced gains with the pair trading at 0.9447. The aussie ended Monday’s trading at 0.9464 versus the loonie. On the downside, the aussie may challenge support around the 0.93 region.
The aussie reversed from an early 5-day high of 1.5778 against the euro, dropping to 1.5881. If the aussie extends decline, 1.60 is possibly seen as its next support level. The pair was valued at 1.5849 when it finished yesterday’s deals.
The aussie pared early gains against the kiwi, trading at 1.1284, off its prior high of 1.1307. The pair was quoted at 1.1273 at yesterday’s close. On the downside, the aussie may locate support around the 1.11 area.
Looking ahead, the Bank of Japan is scheduled to announce its monetary policy decision shortly. The bank is expected to keep its asset purchase program unchanged at ?80 trillion annually.
U.K. CPI and PPI for August and DCLG house prices for July, German and Eurozone ZEW economic sentiment index for September, Eurozone trade data for July and employment for the second quarter are set for release in the European session.
U.S. retail sales and industrial production for August and business inventories for July, as well as Canada existing home sales for August are to be released in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com