Investing.com - The Australian dollar moved lower against the U.S. dollar Wednesday, following the Reserve Bank of Australia’s decision to put a hold on interest rates.
AUD/USD hit 0.9513 in early Asian trade, the pair’s lowest since Tuesday; the pair subsequently consolidated at 0.9526, falling 0.50%.
The pair was likely to find support at 0.9390, Tuesday’s low, and resistance at 0.9700, Monday’s high.
On Tuesday, the Reserve Bank of Australia voted to maintain current interest rates at 4.75%, noting that "an improved inflation outlook would increase the scope for monetary policy to provide some support to demand, should that prove necessary."
Dealers interpreted the comment as a clear sign the RBA was prepared to cut rates, perhaps as early as the beginning of November, shortly after the next batch of inflation figures are due for release.
Early Wednesday, the Australian Bureau of Statistics reported that retail sales, the leading indicator of consumer spending, rose by 0.6% in August, up from 0.5% the previous month, and far exceeding market expectations of a 0.2% gain.
In the U.S. Tuesday, Federal Reserve Chairman Ben Bernanke said the Fed may begin a new lending program to address a potential threat to the U.S. financial system if Europe’s debt crisis worsens.
“We would make sure we would stand ready to provide as much liquidity against collateral as needed as lender of last resort for our banking system,” Bernanke said during testimony with the Joint Economic Committee of Congress.
Bernanke added that the U.S. economic recovery was “close to faltering” and that legislators should refrain from fiscal policies that retard growth.
Meanwhile, the Australian dollar was down against both the euro and the Japanese yen, with EUR/AUD adding 0.20% to hit 1.3974 and AUD/JPY falling 0.84% to hit 72.89.
Later Wednesday, payroll processing firm ADP was to publish a monthly report on U.S. private-sector employment.
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