Forex Today: RBA stays put, US Dollar benefits from risk aversion

Eren Sengezer FXStreet

Here is what you need to know on Tuesday, September 5:

Following Monday's choppy action, markets seem to have turned cautious early Tuesday. The Australian Dollar stays under heavy bearish pressure following the Reserve Bank of Australia's (RBA) policy announcements and the US Dollar benefits from the risk-averse atmosphere. S&P Global will release revisions to August PMI data, Eurostat will publish Producer Price Index (PPI) data for July and the US economic docket will feature July Factory Orders later in the day.

Following the September monetary policy meeting, the RBA announced that it left the policy rate - the Official Cash Rate (OCR) - unchanged at 4.10%, as widely expected. The bank reiterated that "some further tightening of monetary policy may be required," in its policy statement and noted that higher interest rates are working to establish a "more sustainable balance" between supply and demand. AUD/USD turned south following the RBA event and was last seen losing 1.3% on a daily basis at 0.6375.

Australian Dollar price today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.

	USD	EUR	GBP	CAD	AUD	JPY	NZD	CHF
USD		0.26%	0.37%	0.40%	1.26%	0.27%	0.92%	0.22%
EUR	-0.27%		0.13%	0.15%	1.02%	0.02%	0.68%	-0.03%
GBP	-0.39%	-0.11%		0.02%	0.89%	-0.10%	0.55%	-0.16%
CAD	-0.42%	-0.15%	-0.02%		0.85%	-0.10%	0.55%	-0.17%
AUD	-1.27%	-1.03%	-0.90%	-0.87%		-1.00%	-0.34%	-1.06%
JPY	-0.26%	0.00%	0.12%	0.15%	1.01%		0.67%	-0.04%
NZD	-0.96%	-0.65%	-0.56%	-0.49%	0.38%	-0.66%		-0.66%
CHF	-0.22%	0.02%	0.18%	0.17%	1.03%	0.04%	0.69%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Meanwhile, the data from China showed that Caixin Services PMI declined to 51.8 in August from 54.1, reviving concerns over a slowdown in the Chinese economy. Reflecting the souring market mood, the Shanghai Composite Index fell nearly 1% and the Hang Seng Index lost close to 2%.

Following a three-day weekend, US stock index futures were down 0.3% at the time of press. The US Dollar Index was trading at its highest level since late May near 104.50 and the 10-year US Treasury bond yield was flat near 4.2%.

Pressured by the renewed USD strength, EUR/USD started to stretch lower in the early European morning and was last seen trading near 1.0770.

GBP/USD closed the first day of the week in positive territory but retreated back below 1.2600 early Tuesday, erasing all the gains it registered on Monday.

USD/JPY gained traction early Tuesday and advanced to the 147.00 area. Jibun Bank Services PMI in Japan came in at 54.3, matching the flash estimate and the market expectation.

Gold price closed flat near $1,940 on Monday but came under modest bearish pressure early Tuesday, with the 10-year US Treasury bond yield holding steady following the upsurge seen on Friday.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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