The Australian dollar rebounded moderately after the Reserve Bank of Australia left the interest rate without any change at 1 percent, as expected by analysts, and published a dovish statement.
The Australian dollar rose against its U.S. counterpart by 0.48 percent at 0.67 dollar at 9.08 GMT.
“it is reasonable to expect that an extended period of low interest rates will be required in Australia,” the RBA statement said.
The central bank noted that "Inflation is likely to take longer than expected until inflation returns to 2 percent,”. But in general, the statement did not change expectations of a rate cut again this year, most probably in the first half of next year depending on economic developments.
With the RBA acknowledgment that the growth rate is less than expected in the first half of 2019, RBA made a scenario about growth rate to be around 2.50 percent in 2019 and 2.75 percent in the following year with uncertainty about consumption.
According to the Reserve bank of Australia that Inflation is expected to remain just under 2 percent in 2020 and slightly higher than 2 percent in 2021 with unemployment rate down by approximately 5 percent by 2021.
The Aussie dollar has been under pressure amid the lingering trade war with China, Australia’s largest trading partner, where it slipped over the previous twelve sessions.
The People's Bank of China on Tuesday set the exchange rate of the yuan against the U.S. dollar at 6.9683, while it was set during yesterday's trading at 6.9225.
Chinese state media hit back by stating the United States was “deliberately destroying international order.”
In the meantime, the precious metal is hovering around 6-year high as investors continued to hold safe haven assets after the United States designated China as a currency-manipulating country, escalating a protracted trade war between the world's two largest economies.
As of 09:20 GMT, spot gold
fell 0.17 percent to $1,461.7 per ounce.