The Australian and New Zealand dollars lost some ground versus a broadly stronger US dollar on Tuesday, while the Reserve Bank of Australia (RBA) offered no surprise in its monthly policy statement and refrained from talking down the currency. The Australian dollar dropped a third of a US cent to $0.9296 from $0.9331 in early trade as the US currency advanced across a broad front.
The Aussie dollar was, however, still stuck in a familiar $0.9200-$0.9500 band, a range it has been unable to escape since late March. As expected, the RBA left its cash rate unchanged at a record low of 2.5 percent for a 12th consecutive policy meeting, as the economy wrestles with a waning mining boom. It said the currency was overvalued by most measures but stopped short of actively trying to talk it down.
"Slightly stronger language was arguably expected. The local unit has been stubborn for some time now, while other major currencies have declined against the US dollar," said Kara Ordway, a market analyst at City Index. Initial support was found at $0.9310, then $0.9288, the 61.8 percent retracement of the $0.9235-$0.9374 move. The Aussie still managed to advance further against a soggy yen, underpinned by carry trade demand - borrowing in yen to buy higher-yielding Aussie assets.
It rose as far as 97.59 yen, a level not seen since May 2013, and was last at 97.41. It has gained 9 yen since a trough in February and charts point north. Dealers said a test of 98.15, the 61.8 percent retracement of its 2013 fall, was on the cards. The Aussie also stood tall against a battered euro, hovering around 14-month peaks. Sliding dairy prices, down more than 40 percent from their February peak, have been a key factor weighing on the kiwi. Support was seen at $0.8345 and with offers at $0.8410.
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