In addition to investors keeping a watchful eye on the market situation that was 'hard' at the beginning of this week, the focus was also directed to important events in the economic calendar.
Today (Tuesday), the focus in the Asian session is on the Australian central bank's monetary policy meeting which is seen to be the driver of the Aussie dollar currency movement this week.
The Reserve Bank of Australia (RBA) announced that interest rates were kept unchanged at 4.35% for the 6th consecutive meeting in the August 2024 issue.
Attention next turned to a follow-up speech by RBA governor Michele Bullock to explain the central bank's actions to keep interest rates on hold.
The market evaluated Bullock's speech as somewhat dovish when he stated that high interest rates still need to be maintained for longer due to the inflation rate that has not yet reached the target.
He added that interest rate cuts are not on the agenda for the near term, even informing that the RBA is ready to raise interest rates if the situation calls for it.
The market expecting a rate cut to be implemented is not in line with the view of policy makers who do not see the risk of a recession on the Australian economy in the near term.
This situation is seen to provide support for the Aussie dollar in the market, but the currency is currently facing the risk of falling in a risk-off market sentiment environment.
Tensions in the Middle East are rising with Iran reportedly preparing to attack Israel after the recent assassination of Hamas leader Ismail Haniyeh in Tehran.
In fact, Russia is also involved in providing air defense assistance to Iran while Israel is likely to receive the support of the United States.
