* Aussie rises after RBA cuts rates by 25 bps, as expected
* RBA offers no clear sign it would ease again
* Euro unmoved by Praet's comments, dollar index steady
By Anirban Nag
LONDON, Aug 6 The Australian dollar rose on
Tuesday after the Reserve Bank of Australia cut interest rates,
as expected, and gave no clear steer that it would ease policy
further, disappointing some who had positioned for it.
The RBA lowered its main cash rate by a quarter point to a
record low of 2.5 percent, a cut which was fully factored in.
Some in the market had geared up for a 50 basis point cut and a
form of forward guidance or pledge to keep rates low, analysts
The Australian dollar rose 0.6 percent to $0.8989,
pulling away from a three-year low of $0.8848 set on Monday
after weaker-than-expected retails ales data.
"The bounce in the Aussie is unlikely to last. The RBA has
said it expects a further decline in the currency," said Neil
Mellor, currency strategist at Bank of New York Mellon. "I think
a move above 90 U.S. cents would be sold into."
While the Aussie dollar is likely to be pressured by slowing
growth in China as well as a strengthening U.S. economy and
rising U.S. yields, it could win some support in the near-term,
said Hamish Pepper, strategist at Barclays, Singapore.
"Positioning is extremely short. Most of the market, it
seems, has been selling Aussie dollars up to this point, so
perhaps this is a good juncture to take profit on those trades,"
Moves in other major currencies were relatively subdued,
with the euro flat at $1.3255, shrugging off comments
from European Central Bank policymaker Peter Praet that the
bank's forward guidance on low rates had an easing bias and
further rates cuts were an option.
The U.S. dollar rose 0.1 percent to 98.50 yen, helped
by a slight rise in U.S. Treasury yields and a recovery in
Japanese stock markets.
The U.S. currency had retreated on Monday after
below-forecast U.S. jobs data on Friday prompted some analysts
to push back their expectations of when the Federal Reserve
would begin slowing its bond-buying stimulus.
"Unless Bernanke gives a clear signal when the Fed is likely
to move, we think the dollar index and euro/dollar will trade in
a range," BNY's Mellor added. The dollar index was flat
on the day at 81.867.
The dollar had slipped versus the yen earlier in the day,
partly due to stop-loss dollar selling, but regained ground as
Japan's benchmark Nikkei share average pared losses and
turned higher, traders said.