CANBERA (dpa-AFX) - Westpac analysts said on Tuesday that the Reserve Bank of Australia's decision to retain its interest rate at 4.25 percent came as a surprise as many had expected the central bank to cut rates. The surprise decision pushed up the Aussie. Analysts also noted that the Australian dollar was the only G10 currency to post a gain versus the U.S. dollar on the day when regional risk appetite was rather mixed. AUD/USD that traded in the low 1.07s for some hours, reached its daily low of 1.0701 a few minutes ahead of the RBA announcement. However, amid the rate decision, the aussie-greenback pair rose to the 1.0770/80 level and quickly reached a high of 1.0812. The pair then eased slightly and consolidated around 1.0780. EUR/USD that eased down from 1.3130 to 1.3110 squeezed up to the high of 1.3137 after the RBA rate announcement. NZD/USD followed the EUR pattern, jamming from 0.8336 to its 0.8365 high on the RBA but soon probed to its daily low of 0.8328 and then steadied at 0.8340. Elsewhere, USD/JPY was reasonably bid today, reaching a high of 76.78. Japan's Ministry of Finance confirmed that it had intervened on 4 consecutive days after the 31 October 'shock and awe' intervention, totaling about $13bn in follow-up USD/JPY purchases. While noting that the Asian currencies have traded in a range bound fashion through the course of today's session, Westpac analysts said they suspect USD/Asia pairs will continue the same trend until the outcome of Greek negotiations becomes clearer.
The research firm also noted that the U.S equity markets finished the overnight session largely unchanged and today's regional sentiment has been mixed. Chinese equities have fallen sharply, with the composite index down over 2 percent amid talks of weaker than expected loans data for January and the Ministry of Industry's warning of weaker output growth in the early part of this year. Following weak Chinese stocks, the Hang Seng also traded in a negative territory, while Indonesian and Philippines shares were down close to 1 percent. In contrast, South Korean and Taiwan shares have risen and this follows buying interest from foreign investors throughout the course of yesterday's session. The USD/CNY fix came out a touch higher and combined with the data rumors nudged up the non-deliverable forwards curve. The firm pointed out that selling interest in the 12-month USD/CNY non-deliverable forwards remains around the 6.2800 level. USD/KRW traded firmer in early trading but ran into offers above the 1126.00 level in the 1-month NDF. The bounce in the AUD after the RBA left rates on hold helped push USD/KRW lower. This factor also helped push USD/SGD lower after a brief spike above 1.2500. Most other pairs have traded tight ranges against the U.S. dollar.
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© 2012 AFX News
