The Aussie dollar eased on Tuesday after the Reserve Bank of Australia (RBA) held rates unchanged, but left the door wide open for further easing if necessary to support an economy battling a strong currency. The Australian dollar fell half a cent to $1.0395, showing a loss of 0.3 percent on the day. Immediate support is seen at $1.0361, Friday's low, with resistance at $1.0459, the session's high.
Interbank futures were barely changed as the market had only seen a one-in-five chance of an easing this month and were already positioned for in a near 50-50 chance of a cut in March. Swap markets also imply further easing to a record low of 2.75 percent over time.
With inflation restrained by the lofty currency and retail discounting, underlying inflation sits in the lower half of the RBA's long-term target band of 2 to 3 percent, giving the bank plenty of ammunitions to support a slowing economy. The RBA cut rates by 125 basis points last year in part to help revive activity in the housing market and boost manufacturing and retail, two sectors that were hard-hit by a strong Aussie dollar.
The New Zealand dollar slipped to $0.8416 as investors booked profit after striking a 1-1/2-year high of $0.8493 on Monday. This prodded the Aussie to bounce from its lowest since July 2010 against its kiwi cousin to last trade at NZ$1.2352. The euro nursed hefty overnight losses, having run into profit-taking after recent hefty gains to last fetch A$1.2965 and NZ$1.6015. Against the yen, the Antipodeans retreated from four-year highs set on Monday with the Aussie at 96.06 yen, having scaled 97.09 overnight. Likewise, the kiwi eased to 77.73 yen, from a peak of 78.80.
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