The Australian dollar fell sharply against the US dollar on Tuesday following Reserve Bank of Australias policy decision to keep rates steady. The RBA kept rates at a 12-year high of 4.35%, standing pat for the third consecutive meeting. The central bank said that even as recent data suggest easing inflation, Board expects that it will be some time yet before inflation is sustainably in the target range. The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out. AUSUSD pair fell around half a percent on the day to $0.6541 following the rate decision. Australias benchmark 10-year yields also dropped to around 4.1%. Meanwhile, strength in dollar index overseas awaiting FOMC for further clarity on US interest rates after recent data showed sticky inflation levels will be keenly watched in this week.
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