Australian and New Zealand dollars deep in the red, RBA interest rate statement 'shortest in recent memory'

The losses in the commodity Currencies is actually rather difficult to explain at present, "AUD the biggest loser at present, dropping 20 points pretty easily. We’ve had some data but apart from that no news crossing the wires to account for the losses," says Eamonn Sheridan at Forex Live.

Looking at the spot rates we see the pound to Australian dollar exchange rate is sharply higher today on the back of Aussie weakness; GBP-AUD is 1.06 pct up on Monday at 1.5853.
The Australian dollar to US dollar exchange rate is 1.21 in the red at 0.9653.
The euro to Australian dollar is 1.2 pct higher at 1.3550.

(Please Note: The above are wholesale market quotes; your bank will affix its own spread to the above when passing on their retail rates. However, an independent FX provider will guarantee to beat your bank's offer, thus delivering you more currency. Please learn more here.)

Commodity prices are seeing fresh selling and this is likely the cause of the Australian dollar's decline today; silver is nearly a percent in the red while gold is 0.8 pct lower.

Reserve Bank of Australia keeps rates on hold

The Australian dollar really should be doing better, particularly if we consider that the Reserve Bank of Australia (RBA) opted to keep interest rates steady earlier today.

ANZ Research analyst Ivan Colhoun notes that today’s Monetary Policy Decision Statement by the RBA was the shortest in recent memory:

"We interpret this as reflecting little in the way of new information or significant new developments on the economy since the Bank eased rates in early May."

The most interesting comment for Colhoun was: “The Board also judged that the inflation outlook, as currently assessed, may (our emphasis) provide some scope for further easing, should that be required to support demand”.

Commenting on the comment, Colhoun says: "This is a less definitive view on the scope for further easing afforded by the inflation outlook (which may partially reflect the slightly lower AUD in recent times), and which strongly suggests that any further move on rates will likely require at least one further update on the Australian CPI (absent significant unforeseen developments).

"This would seem to rule out a further rate cut before the August meeting at least and will also depend on AUD developments in the interim. We will stick with our November call for now."

New Zealand dollar awash in a see of red

The New Zealand dollar (Currency:NZD) is suffering the same fate as the AUD:

The pound to New Zealand dollar exchange rate is 0.78 pct higher at 1.9095.
The euro New Zealand dollar exchange rate is 0.92 pct higher at 1.6326.
The New Zealand / US dollar pair is 0.93 pct lower at 0.8015.

Richard Driver at Caxton FX says:

"Market sentiment has taken on a fascinating relationship with developments in the US. In past years, good news for the US was good news for the global economy and good news in terms of appetite for commodities. However, investors now know that positive developments from the US will result in a removal of QE3, which is a real negative for growth-linked currencies like the NZD. Yesterday’s weak US data therefore brightened the outlook for the NZD."

"GBP/NZD is trading above 1.90 this morning and upward progress could well slow up today."