The Australian dollar was the biggest gainer in today’s Asian session as it was boosted by not so dovish minutes of the RBA’s May meeting. The minutes of the Reserve of Bank of Australia’s meeting, which were published today, revealed that some members of the Bank’s board needed persuasion that a rate cut was warranted.
The RBA cut its cash rate by 25bps for the first time in a year earlier this month to 1.75%. The surprise reduction drove the Aussie lower, but today’s minutes dampen hopes of further cuts in the near term as it’s likely the central bank will want to wait for further evidence of weakening inflation outlook before cutting rates again.
The Aussie was up nearly 1% in late Asian trading against the US dollar at 0.7355. Higher commodity prices provided an additional lift as crude oil prices approached $50 a barrel on Tuesday.
Lower shale oil output in the US and disruptions to supply in Nigeria and Venezuela have prompted analysts to cut their forecasts of oversupply in the market. US oil futures hit a fresh 6-month high of $48.40 a barrel in today’s Asian session.
The New Zealand and Canadian dollars also benefited from the commodities rally as the greenback fell to 1.2844 versus the loonie, while the kiwi was trading 0.4% higher at 0.6817 against its US counterpart.
The yen fell across the board on Tuesday as improved risk sentiment reduced demand for the safe haven currency. An upward revision to March industrial output in Japan provided little support to the Japanese currency. The dollar was back above the 109 level against the yen in late Asian trading and last stood at 109.33 yen.
In European currencies, the euro edged slightly higher against the dollar to 1.1325 following yesterday’s weak Empire State manufacturing survey out of the US.
The pound however made sharp gains, following a new poll that showed a 15-point lead for the ‘remain’ camp in the UK’s upcoming referendum for EU membership. Sterling was up 0.7% at just above 1.45 dollars, while against the euro, it was testing the 0.78 level.
Coming up later today, UK and US inflation data will likely dominate the European and US sessions. Also to watch out for in the US session are the April housing starts and building permits for the US, as well as the latest global dairy auction.
Meanwhile, speeches by the Fed’s Williams, Lockhart and Kaplan later in the day may also attract some attention.