By: Barbara Zigah
In line with analysts’ and investors’ expectations, the Reserve Bank of Australia today increased key interest rates by 25 basis points to 3.50%, effectively eliminating earlier gains made by the Australian Dollar.
As reported at 3:23 p.m. (JST) in a subdued Tokyo market, the Australian Dollar was trading at $0.9025, a slight dip from yesterday’s late trading in the U.S. In Brisbane, the Aussie closed at $0.9032; during the day’s trading, however, it had dropped to $0.9007 right after the RBA announcement.
Versus the Japanese Yen, the Aussie lost .2%, trading at 81.43 Yen. While some investors are contemplating the timing of the RBA’s next interest rate move, analysts believe it will be well into next year before Australia’s central bank intensifies its somewhat dovish tone and hikes interest rates for a third time.
In the United States, the Federal Reserve Bank begins their rate setting meetings today through tomorrow, and while it is widely anticipated that key rates will remain unchanged, some speculators believe that there’s a possibility that the Fed’s tone will herald an alteration of their current pledge to hold interest rates down for a lengthy period of time.
One currency strategist in Singapore, however, doubts that the strength of the U.S. recovery warrants a change in Fed sentiment and that the historic low interest rates will continue as is.
Aussie Loses Earlier Gains on RBA Announcement
Barbara Zigah
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About Barbara Zigah
After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.