RBA Left Rate Unchanged, US Dollar Near 4-Month High
As expected, the RBA left cash rate unchanged at 1.50%. The Central bank also forecasts that Australia’s economic growth will be above 3% in both 2018 and 2019. Overall, the statement suggested that RBA is in no rush to raise interest rates, despite stable economic forecast. Australia's manufacturing activity index, published by the Australian Industrial Group (AiG), fell to 58.3 points in April from 63.1 in March, indicating a slower but still optimistic rate, as the figure remains above 50, which divides the extension from contraction.
The US dollar stayed stable around four-month highs, awaiting a political decision by the Federal Reserve and key US employment data, that should affect the further rate of the US currency. The Fed will close its two-day meeting on Wednesday. It is expected, that the central bank will keep the policy unchanged, and investors will follow the hints of higher rates in June.
The dollar rose by 2% in April after the 10-year yield on US government bonds raised above the psychologically significant 3.0-percent threshold, to four-year highs last week.
The euro was flat at $1.2075 after slipping 0.4% and approaching $1.2055, the 3-1/2-month low set on Friday. The British pound traded at $1.3711 after dropping to a two-month low of $1.3715 on Monday. Markets await UK PMI manufacturing data, which can affect the pound’s dynamics. It is forecast, that the indicator will show a decrease to 54.8 in April, down from 55.1 in March.
US extends temporary steel tariffs exemptions for EU, Mexico and Canada. Donald Trump announced to a 30-day extension on European Union, Mexico and Canada, allowing for further negotiation. Meanwhile, the US has reached trade agreements-in-principle with Argentina, Australia and Brazil.