(December 05, 2017) The Australian and New Zealand dollars moved higher against their U.S. counterpart on Tuesday, after the Reserve Bank of Australia left interest rates unchanged and as optimism over the vote of a U.S. tax reform bill began to wane.
AUD/USD advanced 0.59% to 0.7644, just off a three-week high of 0.7654 hit overnight.
In a widely expected move, the RBA held its benchmark interest rate at 1.50% at the conclusion of its policy meeting on Tuesday.
Commenting on the decision, RBA Governor Philip Lowe said that the central bank maintained its forecast for inflation to “pick up gradually as the economy strengthens”.
Separately, the Australian Bureau of Statistics said the current account surplus narrowed to A$9.1 billion in the third quarter from A$9.7 billion in the second quarter, whose figure was revised from a previously estimated A$9.6 billion deficit.
Analysts had expected a current account deficit of A$9.2 billion in the last quarter.
Another report showed that Australia’s retail sales increased by 0.5% in October, beating expectations for an uptick of 0.3% and after a 0.1% gain the previous month.
NZD/USD climbed 0.54% to trade at 0.6898.
Also Tuesday, Reserve Bank of New Zealand Governor Grant Spencer said in a speech that the central bank is considering modifying its monetary policy due to persistantly low inflation since the global financial crisis.
The greenback lost some of its gains posted after the U.S. Senate approved a tax overhaulover the weekend, marking President Donald Trump first major political victory.
The Trump administration has said its tax cuts will generate growth and spark inflation, which investors hope will prompt a faster pace of monetary tightening by the Federal Reserve.
However, fresh political turmoil in the U.S. was expected to weigh after former national security adviser Michael Flynn said he is prepared to cooperate in the special counsel probe into alleged links between the Trump campaign and Russia during last year’s election.
Flynn pleaded guilty Friday morning to lying to the Federal Bureau of Investigation about his communications with the Russian ambassador to the U.S. in December 2016.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 93.06 by 02:10 a.m. ET (06:10 GMT).