Forexpros – The Australian dollar rose to a four-day high against its U.S. counterpart on Tuesday, after the Reserve Bank of Australia cut its benchmark interest rate by 0.25% in a bid to shore up confidence, while investors eyed a conference call by the Group of Seven leaders.
AUD/USD hit 0.9804 during late Asian trade, the pair’s highest since May 30; the pair subsequently consolidated at 0.9780, rising 0.53%.
The pair was likely to find support at 0.9702, the low of May 30 and resistance at 0.9887, the high of May 28.
The RBA lowered its benchmark interest rate to 3.50%, the lowest level since October 2009, saying that recent indicators suggested “further weakening in Europe and some further moderation in growth in China”.
The decision came after official data showed that Australia’s current account deficit widened more-than-expected in the first quarter, falling to AUD14.9 billion from a deficit of AUD9.6 billion in the previous quarter.
Analysts had expected the current account deficit to widen to AUD14.1 billion.
A separate report showed that an index of service sector activity in Australia improved to 43.5 in May from a reading of 39.6 the previous month.
The risk-related Aussie found support ahead of a teleconference of finance ministers from the Group of Seven industrialized nations later in the day, to discuss the situation in the euro zone.
Sentiment also strengthened amid expectations for more monetary easing measures by the European Central Bank at its policy meeting on Wednesday, to help stabilize markets.
Elsewhere, the Aussie was higher against the euro with EUR/AUD shedding 0.56%, to hit 1.2778.
Later in the day, the U.S. Institute for Supply Management was to release a report on non-manufacturing activity.
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