The Australian dollar showed mixed performance against its major rivals on Tuesday morning in Asia. While the aussie edged higher against the common unit of Europe, it remained in a downward channel versus the currencies of the U.S. and Japan.
The Reserve Bank of Australia is set to conclude its monetary policy meeting on Tuesday and then announce its decision on interest rates at 12:30 am ET. Analysts are expecting the bank to keep rates on hold at the current level of 4.50 percent.
In the equity front, the Australian market is trading marginally higher after some listless trades with investors treading cautiously ahead of the central bank’s decision on interest rates.
The benchmark S&P/ASX 200 index, which recovered to 4,585 after an initial fall to around 4,564, is currently trading at 4,578, up 2.5 points over its previous close. The broader All Ordinaries index is up 1.10 points at 4,616.90.
Among other markets in the Asia-Pacific region, Japan, Singapore, Malaysia and Shanghai are trading weak, while Hong Kong, New Zealand, South Korea and Taiwan are up in positive territory.
The Australian dollar strengthened against the euro in early Asian deals on Tuesday, mainly due to across the board weakening of the latter.
The aussie touched 1.3982 against the common currency by 10:40 pm ET, the highest level since June 22. On the upside, 1.3940 is seen as the next likely target level for the Australian currency.
The euro lost ground across the board after a report from the Association of German Banks estimates that Germany’s ten biggest lenders, including Deutsche Bank AG and Commerzbank AG, will need an additional EUR 105 billion in fresh capital to meet estimated new Tier 1 capital ratios.
Investors are also cautious as the European Union members meet today to discuss the penalties that will be imposed on member nations that fail to implement to the EU budget rules.
The Australian dollar fell to a 4-day low of 0.9179 against the US dollar before showing choppy trend around 8:45 pm ET. The aussie-greenback pair is presently worth 0.9156 with 0.9040 seen as the next likely support level.
With US markets closed due to a Labor Day holiday on Monday, currency markets carried over Friday’s upbeat job data as the US non-farm payroll employment fell by less than analysts had predicted.
Employment fell by 54,000 jobs in August, matching the revised decrease in jobs seen in July. Economists had expected employment to fall by about 120,000 jobs compared to the loss of 131,000 jobs originally reported for the previous month.
The Australian dollar also moved in a similar fashion against the yen on Tuesday morning in Asia, slipping to a 4-day low of 76.91 before showing choppy around 8:45 pm ET. If the aussie weakens further, likely support level is seen at 76.30. The aussie-yen pair is presently quoted at 77.17.
Today, the Bank of Japan will announce interest rate decision shortly with which the consensus is for the Central Bank to keep interest rates at 0.1 percent.
The Australian dollar lacked a clear direction against the New Zealand dollar on Tuesday morning in Asia and the pair moved in a range between 1.27 and 1.2660. The aussie-kiwi pair is presently quoted at 1.2690.
Looking ahead, Japan is set to release its leading and coincident indexes for July at 1:00 am ET.
German factory orders for July are expected to garner market attentions in the upcoming European sessions.
There are no major economic data due out from the North American session today.