The Australian dollar dipped on Tuesday after the Reserve Bank of Australia kept rates on hold at its monthly policy meeting, but sounded cautious on economic growth after a run of soft data pointed to a possible contraction last quarter. The Aussie dollar had a soft tone at $0.7452, from $0.7477 early, having dipped to a trough of $0.7414 on Monday amid wild swings in the euro.
The Reserve Bank of Australia (RBA) kept, as expected, its cash rate at a record low of 1.5 percent in its last policy meeting of the year, noting that the annual pace of growth was set to slow. "The statement highlighted a mixed economy with caution around labour, growth and inflation," said Su-Lin Ong, a senior economist at RBC Capital Markets.
The Antipodean currencies held near multi-month highs against the yen with the Aussie at 84.82 and the kiwi at 81.15. The New Zealand dollar held steady at $0.7139, having reversed earlier gains. Yet, it was still some way off a trough of $0.7070 set on Monday when the country's Prime Minister announced his resignation.
New Zealand Finance Minister Bill English said he planned to stand for prime minister, with national elections due in late 2017. Resistance was found at $0.7170 with support around $0.7130. New Zealand government bonds dipped, sending yields as much as 4 basis points higher at the long end. Australian government bond futures were near multi-month lows, with the three-year bond contract off 1 tick at 98.040. The 10-year contract shed 2 ticks to 97.2200, while the 20-year contract lost 1.5 ticks to 96.5450.
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