Reserve Bank of Australia lowered interest rates and New Zealand dollar moved higher

August 2, 2016

This article is originally referred from Traders Trust Daily Morning Report

The Australian dollar was steady against its U.S. counterpart on Tuesday, after the Reserve Bank of Australia lowered interest rates to a new record-low, while the New Zealand dollar moved higher as sentiment on the greenback remained broadly under pressure.

The RBA lowered its benchmark interest rate from 1.75% to a new record-low of 1.50%, in line with expectations.

Speaking after the decision, RBA Governor Glenn Stevens said “recent data confirmed that inflation remains quite low.”

“Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time,” he added.

Also Tuesday, the Australian Bureau of Statistics said building approvals dropped 2.9% in June, compared to expectations for a 0.5% rise. Building approvals declined by 5.4% in May, whose figure was revised from a previously estimated 5.2% drop.

A separate report showed that Australia’s trade deficit widened to A$3.195 billion in June from A$2.418 billion in May, whose figure was revised from a previously estimated deficit of A$2.218 billion.

Analysts had expected the trade deficit to narrow to A$2.000 billion in June.

In New Zealand, data showed that inflation expectations for the next two years ticked up to 1.7% in the second quarter from 1.6% in the three months to March.

Meanwhile, sentiment on the greenback remained vulnerable after the advance read on second quarter U.S. gross domestic product showed on Friday a 1.2% annualized growth rate, well below expectations for 2.6%. First quarter GDP was revised lower to 0.8% from 1.1%.

The disappointing data lessened expectations for an early interest rate rise from the Federal Reserve.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.11% at 95.65, still close to Friday’s five-week lows of 95.33.

Disclaimer: The content in this article is Investment Research and should not be construed as containing Investment Advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. TTCM Traders Trust Capital Markets Ltd, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Original Source: Traders Trust Daily Morning Report

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