While market sentiment is seen recovering and is expected to support trading for commodity currencies, the Australian dollar instead moved weaker in the Asian session this morning as cautious investors awaited the outcome of the Australian central bank's policy meeting.
The Reserve Bank of Australia (RBA) has kept interest rates unchanged at a low of 0.10% for its third monetary policy meeting this year.
The RBA also maintained a 0.10% target for Australian government 3-year bond yields and bond purchase program parameters.
Australia's economic outlook is still shaky but the economic recovery is seen to be better than expected.
The inflation rate is forecast to remain below the 2% target level for the next few years.
If the situation becomes more urgent, the RBA expresses readiness to increase bond purchases if necessary.
Until the 2% -3% inflation target is reached, the RBA has stated that they will not raise interest rates.
The situation is expected to continue until at least 2024.
Overall, the RBA's statement is seen to remain dovish and likely to have a devaluation effect on the Australian dollar.
The Australian dollar was seen not reacting significantly to the price chart following the expected outcome of the meeting.
However, investors need to monitor the current market sentiment which also affects the trading of the Aussie dollar in the market.
