The Australian dollar rose against the greenback on Monday, before members of the Reserve Bank of Australia’s (RBA) board assemble on Tuesday to discuss monetary policy. Market analysts are forecasting the bank to keep its interest rate unchanged after cutting its official cash rate by 25 basis points since November 2011 to its current record low level of 2.50%.
The Australian dollar rose 0.54% higher at $0.8797 at the time of writing, at the same time the aussie advanced by 0.32% to $1.5351 against the 18-block euro.
Data released earlier on Monday showed that building approvals for new buildings in the country dropped for a third month in December. A separate report released showed the job listings in Australia lowered for the fourth month in a row in January, showing signs that the labour sector has weakened further.
Australian Dollar – RBA Rate Decision
The Reserve Bank of Australia (RBA) has kept its interest rate since August 2013, after trimming its 2.75% benchmark rate by 25 basis points. In the previous meeting, officials of the bank did not close the possibility of reducing the rates further to support the economy growth and meeting the inflation target.
“While the exchange rate had depreciated over the month, members agreed that it remained uncomfortably high and a lower level would likely be needed to achieve balanced growth in the economy,” the December meeting minutes stated.
Fed-Tapering Decision
The Federal Open Market Committee (FOMC) concluded its two-day meeting last week by deciding to reduce the central bank’s monthly purchases of treasuries and mortgage-backed securities (MBS) by an additional $5 billion.
Fed members concluded to reduce the monthly asset purchases despite the weak employment report which came in below analyst forecast. The unemployment rate dropped to 6.7% in December, the lowest since October 2008.
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