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Forex - AUD/USD erases gains as RBA holds on interest rate

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Forex Pros - The Australian dollar erased gains against its U.S. counterpart on Tuesday, retreating from a two-month high, after the Reserve Bank of Australia left its key cash rate unchanged.

AUD/USD retreated from 1.0202, the pair's highest since January 3, to hit 1.0164 during late Asian trade, shedding 0.19%.

The pair was likely to find support at 1.0085, last Thursday's low and resistance at 1.0223, the high of January 3.

The RBA held the overnight cash rate target at 4.75% in a widely expected move, saying a stronger currency and an expected slowdown in employment growth would help to control inflation.

RBA Governor Glenn Stevens called monetary policy "mildly restrictive" and appropriate given the economic outlook.

The Aussie's earlier gains came after official data showed that Australian retail sales rose more-than-expected in January, led higher by supermarkets and grocery stores after floods in the nation's northeast drove up food prices.

The Australian Bureau of Statistics said sales advanced 0.4%, after rising by 0.2% in December, outstripping expectations for a 0.3% gain.

The Aussie was also down against the euro, with EUR/AUD rising 0.13% to hit 1.3571.

Later Tuesday, the Chairman of the Federal Reserve, Ben Bernanke, was to testify on the semi-annual monetary policy report before the Senate Banking Committee in Washington, while the U.S. Institute for Supply Management was to publish a report on manufacturing activity.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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