Aussie down, kiwi flat

The Australian dollar pinned near one-week lows on Tuesday as the country's central bank cut its benchmark cash rate in a widely expected move and signalled it could go again, if needed. The Aussie dollar held at $0.6986, having dropped 0.9% overnight as its U.S counterpart rallied on hopes of some resolution in a protracted Sino-US trade war.
The Reserve Bank of Australia (RBA) reduced its cash rate a quarter of a percentage point to a historical low 1.00% - the second easing in as many months - and left the door ajar for another cut. The rate cut did not further weigh on the Aussie as the RBA's accompanying statement was "short on future guidance," said Ray Attrill, head of forex strategy at the National Australia Bank.
"The statement didn't further move the dial on future rate cut expectations," he added. "The RBA's intent is to sit back and see if the 50 basis point cut since June has had an effect on the economy, specially the labour market," Attrill noted. "The market is assuming the terminal cash rate will be lower than 75 basis points so there is no reason to sell the Aussie on that which is why it did not move on the decision."
The Aussie faces strong resistance in the $0.7000/20 zone, while technical support lies at May's low of $0.6865, a level that has become a major chart bulwark. The RBA is hardly alone in lowering interest rates, with global central banks from the United States to China and India either easing policy or signalling intent to do so soon. The US Federal Reserve is widely expected to cut rates later this month. Market focus now shifts to a speech by RBA Governor Philip Lowe due 0930 GMT in the northern Australian city of Darwin where he is expected to provide additional clues on the future path of interest rates.
Futures imply a 50-50 chance of another cut to 0.75% in August. The New Zealand dollar was flat at $0.6676, after slipping 0.6% overnight. The Reserve Bank of New Zealand (RBNZ) is also on an easing path with markets implying around a 69% chance of a quarter-point cut on August 7. A further easing to 1% is priced in by mid-2020. New Zealand government bonds were broadly flat. Australian government bond futures gained, with the three-year bond contract and the 10-year contract each up 1.5 ticks at 99.075 and 98.6550.