By TraderVox.com
Tradervox (Dublin) – The Australian dollar has strengthened against the US dollar after the Reserve Bank of Australian decided to lower interest rate. The advance was limited as the cut on overnight lending rate was lower than the market was expecting. The RBA decreased the interest rate by 0.25 to reach 3.5 percent, but the market was expecting a 0.5 percent decline.
The central bank had earlier made a 0.25 cut from 4.0 percent to 3.75. Analysts have said that the continued crisis in Europe might force the RBA to make further decisions on the interest rate. The New Zealand currency has held its yesterday’s gains as Asian stocks rose increasing the demand for riskier assets. According to a currency strategist, Roy Teo, of ABN Amro Private Bank in Singapore, the RBA did not meet the high expectation of the market in their rate decision but it has still caused so changes in the market and investors need to be positioned for short-covering.
The Australian dollar might bring some risk appetite in the market but only for a short time before the market start focusing on the Greece election to be held on June 17. The crisis in Italy and Spain is also expected to escalate but the market is waiting for the outcome at the G8 meeting. The Australian dollar has climbed by 0.6 percent against the greenback to exchange at 97.84 US cents. The Australian dollar had slid to eight-month low of 95.82 during trading last week.
The New Zealand dollar was high against the US dollar by 0.3 percent today to trade at 75.84 US cents. The kiwi increased as Asian stocks rose; the MSCI Asia Pacific Index of stock increased by 1.4 percent after it had declined for the last four trading days. Analysts are expecting this advance to be momentary and the Asia Pacific currencies might go back to their losing streak.
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