Forexpros – The Australian dollar tumbled to a three-day low against its U.S. counterpart on Tuesday, after the Reserve Bank of Australia decided to lower its interest rate for the first time since early 2009.
AUD/USD hit 1.0567 during late Asian trade, the pair’s lowest since October 27; the pair subsequently consolidated at 1.0401, dropping 1.22%.
The pair was likely to find support at 1.0202, the low of October 21 and resistance at 1.0634, the high of September 9.
The Aussie came under pressure after the RBA cut its cash rate by 0.25% to 4.5%, citing a moderation in the pace of global growth.
Commenting on the decision, RBA governor Glenn Stevens said that “with overall growth moderate, inflation now likely to be close to target and confidence subdued outside the resources sector, the Board concluded that a more neutral stance of monetary policy would now be consistent with achieving sustainable growth and 2-3% inflation over time.”
Earlier Tuesday, industry data showed that new homes sales in Australia dropped 3.5% in September after a 1.1% increase the previous month. A separate report showed that house price inflation declined less-than-expected in the third quarter, ticking down 1.2% after a 0.5% decline the previous quarter.
Meanwhile, data showing that Chinese manufacturing activity dropped to its lowest level since February 2009 in October also weighed on the Aussie. China is Australia’s largest export destination.
Elsewhere, the Aussie was down against the euro with EUR/AUD rising 0.58%, to hit 1.3237.
Later in the day, the Institute of Supply Management is to produce a report on U.S. manufacturing activity.