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AUD Jumps Even as RBA Suggests Easing in the Future

April 2, 2013 at 14:58 by Vladimir Vyun

The Australian dollar jumped today after the Reserve Bank of Australia kept interest rates unchanged, even though the central bank hinted that more accommodative measures should be expected in the future.

The RBA kept its main interest rate at 3 percent. Governor Glenn Stevens expressed mildly positive view on the economic developments. He said regarding the global economy:

Global growth is forecast to be a little below average for a time, but the downside risks appear to be reduced.

As for the domestic economy, Stevens noted that “growth was close to trend over 2012, led by very large increases in capital spending in the resources sector”.

The Governor explained that the accommodative policy started showing its favorable effects on the economy, but expressed concerns about the high exchange rate. In conclusion, Stevens stated that additional stimulus is possible:

The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand.

Usually, prospects for monetary easing weaken a currency. But it looks like the Aussie is content that an interest rate cut did not happen just yet.

AUD/USD rose from 1.0420 to 1.0459 and AUD/JPY advanced from 97.14 to 97.83 as of 14:58 GMT today. EUR/AUD dropped from 1.2323 to 1.2270.

If you have any questions, comments or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

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