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Australia dlr subdued, RBA provides the briefest of boosts

Published 05/07/2016, 03:56 pm
Updated 05/07/2016, 04:00 pm
© Reuters.  Australia dlr subdued, RBA provides the briefest of boosts
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SYDNEY/WELLINGTON, July 5 (Reuters) - The Australian dollar staged a fleeting rally on Tuesday after the central bank gave no clear guidance on whether it would ease again, leaving markets wondering if it had switched back to a neutral stance.

The Aussie climbed as far as $0.7545 AUD=D4 from around $0.7522, matching a 1-1/2 week high set overnight. But it then retreated to $0.7510, down 0.4 percent on the day.

The market had been looking for the Reserve Bank of Australia (RBA), which kept the cash rate at a record low 1.75 percent, to sound dovish given a more uncertain outlook at home and abroad.

Instead, the RBA noted that any effects on the global economy from the UK referendum remained to be seen. The political gridlock at home did not get a mention in the statement.

Australia's election on Saturday produced no clear winners even though more than two-thirds of the votes have been counted. It may be days, if not weeks, before an outcome is known. said whether the RBA will cut rates hinges now on second quarter inflation data due in late July.

"My view is that they will ease in August, and that will be in response to another low inflation read and given the risk to the growth outlook from the messy election result and Brexit," said Shane Oliver, chief economist at AMP Capital.

Also under some pressure, the New Zealand dollar NZD=D4 slipped 0.5 percent to $0.7196, recoiling from a 1-1/2 week peak of $0.7241 set overnight.

New Zealand government bonds 0#NZTSY= edged up, sending yields 1.5 basis points lower across the curve. Also firmer, Australia's 10-year bond futures YTCc1 climbed 7.5 ticks to 98.0600.

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