The Australian dollar fell on Tuesday after the central bank kept interest rates unchanged, while the dollar regained some of the losses it experienced when data showed a decline in manufacturing activity in the United States. In a monetary policy decision, the Reserve Bank of Australia maintained the cash rate at 3.6 percent on Tuesday, following a series of ten consecutive increases, stating that policymakers needed more time "to assess the impact of the rate increases so far and the economic outlook."
The Australian dollar dropped as much as 0.4 percent after the decision, with its last decline at 0.3 percent, trading at 0.6766 dollars. In the broader market, the dollar regained some of its gains during the Asian trading session after stumbling on Monday, driven by data indicating further slowdown in the U.S. economy.
A survey by the Institute for Supply Management on Monday showed that manufacturing activity fell to its lowest level in nearly three years in March, as new orders continued to contract, with all sub-components of the manufacturing purchasing managers' index dropping below the 50 threshold for the first time since 2009. This led to a widespread decline in the dollar, following the drop in U.S. Treasury yields as investors adjusted their expectations regarding how long interest rates would need to remain tight to tame inflation.
The British pound and New Zealand dollar reached their highest levels in several weeks during early Asian trading on Tuesday but later retreated.
