Australian Dollar Spikes Up As RBA Keeps Cash Rate On Hold

The Australian dollar firmed against its key counterparts in the Asian session on Tuesday, as the Reserve Bank of Australia held its cash rate steady in its final meeting this year, saying that recent rate cuts are supporting employment and income growth and achievement of the inflation goal.

The board of the Reserve Bank of Australia, governed by Philip Lowe, decided to leave the cash rate unchanged at a record 0.75 percent.

"Given these effects of lower interest rates and the long and variable lags in the transmission of monetary policy, the Board decided to hold the cash rate steady at this meeting," the bank said in a statement.

The bank maintained that it was reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target. The bank said it is prepared to ease monetary policy further, if needed.

The bank observed that the lower cash rate has put downward pressure on the exchange rate, which is supporting activity across a range of industries.

Data from the Australian Bureau of Statistics showed that Australia logged current account surplus for the second consecutive quarter in the three months to September. The current account surplus rose A$3.18 billion to A$7.85 billion in the September quarter.

The currency outperformed against its most major counterparts on Monday, as upbeat Chinese data helped ease investor concerns about slowing global growth. It rose 0.9 percent against the greenback, 0.4 percent against the yen and 0.3 percent against the euro for the day.

The aussie appreciated 0.4 percent to near a 3-week high of 0.6844 against the greenback, from a low of 0.6815 it recorded at 6:30 pm ET. The pair had finished Monday's deals at 0.6818. Should the aussie extends its rally, 0.71 is likely seen as its next resistance level.

After a brief decline to 74.27 against the yen at 6:30 pm ET, the aussie turned higher, rising 0.6 percent to a 3-week high of 74.73. The aussie had finished yesterday's trading session at 74.30 against the yen. The currency is seen locating resistance around the 78.00 mark.

The aussie advanced to 1.6185 against the euro, its biggest since November 14, and marked a 0.4 percent gain from a low of 1.6253 seen at 5:30 pm ET. The euro-aussie pair was valued at 1.6247 at Monday's close. The aussie may face resistance around the 1.60 mark, if it appreciates again.

The aussie was 0.3 percent higher at 1.0510 against the kiwi, following a decline to 1.0480 at 10:15 pm ET. At Monday's close, the pair was worth 1.0485. Extension of the aussie's uptrend may take it to a resistance around the 1.08 region.

The aussie gained 0.5 percent against the loonie, approaching near a 4-week high of 0.9107. The rally came after a drop to 0.9064 at 5:00 pm ET. The pair was quoted at 0.9074 when it ended trading on Monday. Next immediate resistance for the aussie is likely seen around the 0.92 level.

Looking ahead, at 2:30 am ET, Swiss consumer inflation for November is slated for release.

U.K. construction PMI for November and Eurozone PPI for October are due out in the European session.