Aussie is worst performing major currency after surprising RBA decision

Australian dollar fell on Tuesday against a basket of major rivals, resuming losses against US dollar and becoming worst performing major currency after surprising policy decisions by the Reserve Bank of Australia.

The RBA held interest rates unchanged for the second meeting in a row in order to gather more clues on the impact of recent interest rate hikes on the economy, while analysts expected a 0.25% rate hike. 

AUD/USD tumbled over 0.9% to 0.6655, with a session-high at 0.6723, after rising 1.1% on Monday, the first profit in four days away from a three-week high at 66.22 cents.

Aussie rose 0.9% against US dollar in July, the second monthly profit in a row amid strong Australian labor data and prospects for more RBA interest rate hikes.

Worst Performing Currency

Aussie is now the worst performing currency amid the major 8 currencies, losing 0.9% against US dollar, euro, and the pound, and losing 0.7% against both the yen and the franc, while plumbing a two-week low against the New Zealand dollar, and a four-week low against Canadian dollar. 

RBA

Unexpectedly, the RBA held interest rates unchanged to monitor economic condition for a longer amount time before shaking things again.

Following the decision, the interest rate gap between Australia and the US held at 140 basis points, bolstering the US dollar's stance. 

The RBA noted that while inflation has taken a southward trend, it remains too high, while consumer spending remains too week, and labor markets continue to be very tight. 

The RBA opened the door more policy tightening to bring inflation to normality, but it'll depend on upcoming data.