FX : CURRENCIES: Australian Dollar Slips After RBA Holds Steady
By Lisa Twaronite
The Australian dollar took center stage in Asian trading Tuesday, slipping after the Reserve Bank of Australia left its cash rate unchanged and issued an upbeat economic assessment without providing any clues as to when it might tighten its policy.
The Aussie traded at 84.05 U.S. cents, compared with 84.41 U.S. cents shortly before the decision was announced.
The Australian economy has been "stronger than expected," the RBA governor said in a statement released after the central bank's monthly policy meeting, citing resilience in consumer spending, exports and business investment.
But the statement said the bank's "present accommodative setting of monetary policy remains appropriate for the time being," and the bank left its key cash-rate target at a 49-year low of 3.0%.
Meanwhile, the dollar and yen edged down as investors' risk aversion ebbed in line with a recovery in Asian equities markets. Lower-yielding currencies such as the yen and the dollar tend to benefit whenever risk appetite fades.
On Monday, Shanghai's Composite Index fell 6.7%, while the smaller Shenzhen Composite Index plunged 7.1%, amid concerns about slower bank lending and worries that new share issuance by leading companies would dilute the value of existing stock.
But on Tuesday, the Shanghai Composite was up 0.6% in afternoon trading, after two competing indexes measuring manufacturing activity in China indicated expansion in August, suggesting industrial activity will continue to pick up speed in coming months.
The greenback bought 93.22 yen, up from 92.98 yen in late North American trading on Monday.
The dollar index (DXY), which measures the U.S. unit against a basket of six major currencies, stood at 78.001, down from 78.242 late Monday.
The euro bought $1.4361, up from $1.4316 late Monday.
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