2018.08.0703:43:00UTC+00Australian Dollar Strengthens After RBA Holds Fire On Rate

The Australian dollar climbed against its major counterparts in the Asian session on Tuesday, after the Reserve Bank of Australia kept its key interest rate unchanged at a record low, saying low rates continued to support the economy.

The decision was widely expected by economists.

The board of the Reserve Bank of Australia, governed by Philip Lowe voted to maintain the cash rate at 1.50 percent.

The bank had reduced the rate by 25-basis points each in August and May last year.

The low level of interest rates is continuing to support the Australian economy, RBA noted. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual, said RBA.

The latest survey from the Australian Industry Group showed that Australia's construction sector continued to expand in July, and at a faster pace, with a Performance of Construction Index score of 52.0.

That's up from 50.6 and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

Asian markets were mostly higher following the positive cues from Wall Street amid upbeat corporate earnings results and higher crude oil prices. Nevertheless, investors remained cautious due to worries about the impact of rising U.S.-China trade tensions on global economic growth.

The currency showed mixed performance against its major rivals on Monday. While it rose against the euro and the kiwi, it held steady against the yen. Against the greenback, it declined. The aussie appreciated to 1.0993 against the kiwi, its highest since January 31, and marked a 0.2 percent gain from Monday's closing value of 1.0971. The aussie is seen finding resistance around the 1.11 level.

After falling to 0.7381 against the greenback at 5:30 pm ET, the aussie reversed direction and climbed 0.3 percent to 0.7400. The pair ended Monday's trading at 0.7387. Continuation of the aussie's uptrend may see it challenging resistance around the 0.75 level.

The aussie edged up to 0.9610 against the loonie, from a 4-day low of 0.9599 seen at 12:30 am ET. At Monday's close, the pair was worth 0.9604. The aussie is poised to challenge resistance around the 0.98 mark.

After falling to 82.18 against the Japanese yen at 8:30 pm ET, the aussie changed direction and advanced to 82.37. The aussie finished Monday's trading at 82.29 versus the yen. Next key resistance for the aussie is seen around the 84.00 region.

Data from the ministry of Internal Affairs and Communications showed that the average of household spending in Japan fell 1.2 percent on year in June, coming in at 267,641 yen. That exceeded expectations for a decline of 1.4 percent following the 3.9 percent drop in May.

The aussie was trading higher at 1.5628 against the euro, up 0.2 percent from a low of 1.5653 hit at 6:30 pm ET. The euro-aussie pair was worth 1.5639 at Monday's close. The aussie is likely to test resistance around the 1.55 mark.

Looking ahead, U.K. Halifax house prices for July are scheduled for release in the European session.

In the New York session, Canada Ivey PMI for July is set for release.