CANBERA (dpa-AFX) - The Australian dollar weakened against other major currencies in the Asian session on Tuesday, after the Reserve Bank of Australia reduced its benchmark interest rate by a quarter-point as underlying inflation continued to soften and labor conditions eased slightly.
The board decided to lower the cash rate target by 25 basis points to 3.60 percent. Previously, the bank had reduced the rate by 25 basis points each in May and February.
'With underlying inflation continuing to decline back towards the midpoint of the 2-3 per cent range and labour market conditions easing slightly, as expected, the Board judged that a further easing of monetary policy was appropriate,' the bank said in a statement.
Traders also seemed reluctant to make significant moves ahead of the release of several closely watched economic reports in the coming days, including report on US consumer price inflation in the month of July later in the day that could impact the outlook for interest rates.
Ahead of the release of the data, CME Group's FedWatch Tool is indicating an 86.5 percent chance the Fed will lower interest rates by a quarter point next month.
Meanwhile, optimism over a renewed US-China trade truce is aiding market sentiment.
Traders focuses on the Monetary Policy Statement, followed by the RBA Governor, Michele Bullock's press conference.
In the Asian trading today, the Australian dollar fell to a 5-day low of 0.6496 against the U.S. dollar, from yesterday's closing value of 0.6514. The aussie may test support near the 0.63 region.
The aussie dropped to a 4-day low of 0.8952 against the Canadian dollar, from an early more than 2-week high of 0.8988. On the downside, 0.88 is seen as the next support level for the aussie.
Against the yen and the euro, the aussie slipped to 96.36 and 1.7885 from an early near 2-week highs of 96.84 and 1.7812, respectively. If the aussie extends its downtrend, it is likely to find support around 94.00 against the yen and 1.80 against the euro.
The aussie edged down to 1.0958 against the NZ dollar, from Monday's closing value of 1.0967. The next possible downside target for the aussie is seen around the 1.08 region.
Meanwhile, the other antipodean currencies or the NZ dollar also traded lower in the Asian session after the RBA slashed its interest rate.
The NZ dollar fell to 87.90 against the yen, from an early near 2-week high of 88.20. The kiwi is likely to find support around the 86.00 region.
Against the U.S. dollar and the euro, the kiwi slid to 0.5926 and 1.9610 from yesterday's closing quotes of 0.5939 and 1.9560, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.58 against the greenback and 1.97 against the euro.
Looking ahead, U.S. NFIB business optimism index for July, Canada building permits for June, U.S. CPI data for July, U.S. WASDE report, U.S. Redbook report and U.S. monthly budget statement for July are slated for release.
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