CANBERA (dpa-AFX) - The Australian dollar weakened against other major currencies in the Asian session on Tuesday, despite Australia's consumer confidence improving to a three-and-a-half year high in August as the central bank is expected to lower interest rates further after a third reduction this year.
Data from Westpac-Melbourne Institute showed that consumer sentiment index rose to 98.5 in August from 93.1 in July. The improvement followed a further reduction in interest rates by the Reserve Bank of Australia. With the latest 25 basis points cut, interest rates dropped by 75 basis points since the start of the year.
Moreover, the bank forecast suggested that interest rates will likely need to be a little lower to keep the economy on track. This has reinforced expectations that mortgage interest rates are headed lower, giving a broad-based boost to sentiment, Westpac said.
Meanwhile, Asian stock markets traded higher amid optimism of a truce in the conflict between Russia and Ukraine with US President Donald Trump planning a summit meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy very soon.
Globally, investors are monitoring the developments of the meeting, as any progress in talks could end the war and streamline global trade which is already affected by new US tariffs.
In the Asian trading now, the Australian dollar fell to 0.6485 against the U.S. dollar, 1.7977 against the euro and 95.80 against the yen, from yesterday's closing quotes of 0.6495, 1.7966 and 96.07, respectively. If the aussie extends its downtrend, it is likely to find support around 0.62 against the greenback, 1.80 against the euro and 93.00 against the yen.
Against the Canada and the New Zealand dollars, the aussie slid to 5-day lows of 0.8958 and 1.0949 from Monday's closing quotes of 0.8964 and 1.0965, respectively. The aussie may test support around 0.87 against the loonie and 1.07 against the kiwi.
Looking ahead, Canada CPI data in July, U.S. building permits for July, housing starts for July and U.S. Redbook reports are slated for release in the New York session.
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