Australian Dollar Rises On RBA's Surprise Rate Hike

(RTTNews) - The Australian dollar strengthened against other major currencies in the Asian session on Tuesday, after Australia's central bank unexpectedly raised its benchmark interest rate by a quarter-point.

The monetary board of the Reserve Bank of Australia decided to hike the cash rate target by 25 basis points to 3.85 percent. Markets widely expected the apex bank to leave the rate unchanged today.

The board also lifted the rate paid on Exchange Settlement balances by 25 basis points to 3.75 percent.

"Given the importance of returning inflation to target within a reasonable timeframe, the Board judged that a further increase in interest rates was warranted today," Governor Philip Lowe said.

In the Asian trading today, the Australian dollar rose to nearly a 2-1/2-month high of 92.39 against the yen and a 1-week high of 1.0832 against the NZ dollar, from early lows of 90.36 and 1.0725, respectively. If the aussie extends its uptrend, it is likely to find resistance around 94.00 against the yen and 1.09 against the kiwi.

Against the euro, the U.S. dollar and the Canadian dollar, the aussie advanced to near 2-week highs of 1.6377, 0.6709 and 0.9078 from early lows of 1.6583, 0.6620 and 0.8969, respectively. The aussie may test resistance around 1.61 against the euro, 0.69 against the greenback and 0.91 against the loonie.

The other antipodean currency of Australia, the New Zealand dollar, also strengthened after the unexpected rate hike from RBA.

The NZ dollar rose to near a 5-month high of 85.35 against the yen and near a 2-week high of 1.7728 against the euro, from early lows of 84.69 and 1.7801, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 88.00 against the yen and 1.74 against the euro.

Against the U.S. dollar, the kiwi edged up to 0.6197 from an early low of 0.6163. The kiwi may test resistance around the 0.64 area.

Looking ahead, Swiss consumer confidence for the second quarter, manufacturing PMI reports from European countries for April and Eurozone flash CPI for April are due in the European session.

In the New York session, U.S. factory orders for March is slated for release.