Australian dollar lost ground against its US peer on Tuesday, due to the sharp retreat of the Asian stocks overnight, which reduced the appetite for risk.
AUD/USD slid to a session low at 0.9404 at 5:33 GMT, after which consolidation followed at 0.9419, falling 0.15% for the day. Support was likely to be found at September 17th low, 0.9286, while resistance was to be met at June 18th high, 0.9574.
The MSCI Asia Pacific Index of shares dropped 0.7%, after the 0.5% retreat of the Standard and Poor’s 500 Index on Monday. “The equity markets opened on a softer foot, and we’re seeing a bit of weakness in the Aussie dollar as some risk comes off the table,” said Jim Vrondas, the Sydney-based chief currency and payment strategist at OzForex Ltd., cited by Bloomberg. “I don’t expect it to have a long-lasting effect.”
Traders saw a 49% chance that the Reserve Bank of Australia (RBA) will cut its benchmark interest rate additionally from an already record low of 2.5% by April 2014.
The Aussie found support on Monday, following the release of Chinese PMI in manufacturing, which showed that activity in the sector has expanded.
Meanwhile, on Monday the Senate of the United States began considering a measure the House passed on September 20th, that cuts off money for President Barack Obama’s health-care law and finances the federal government through the middle of December, Bloomberg imparted. With government funding set to expire on October 1st and the Treasury expected to lose its ability to borrow funds in mid-October, federal offices have begun considering the possibility of a shutdown.
In addition, New York Fed President Dudley said yesterday that US economy “still needs the support of a very accommodative monetary policy,” while his Atlanta counterpart Dennis Lockhart stated that monetary policy should stress on creating a more dynamic economy after a recent cooling in economic growth.
Later in the trading day the United States will release data on the index of house prices in 20 large cities in the country, evaluated by S&P and Case-Shiller. It is projected that the annual rate of increase in prices may continue and the index may show a 12.40% climb in the month of July, following the 12.07% increase a month ago. The Conference Board research group will reveal the results of its most recent survey on consumer confidence in the United States. Expectations pointed that the correspondent index will slow down to 80.0 in September from 81.5 in August. Better than projected results may certainly heighten the appeal of the greenback.
Elsewhere, the Australian dollar was lower against the euro, with EUR/AUD cross increasing by 0.31% for the day to trade at 1.4354 at 7:13 GMT. AUD/NZD pair was gaining 0.34% to trade at 1.1306 at 7:15 GMT. The Aussie has gained 2.4% in the past month, or the best performing currency after the New Zealand dollar, which has appreciated 5.2% during the same period, among 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
