The Australian dollar surged to its seven-day high against the world's reserve currency on Tuesday after policy makers with the Reserve Bank of Australia opted to keep interest rates at record lows, Bloomberg reports.
The Aussie bounced back from a poorer performance earlier during the Tuesday trade session, dragged down by underwhelming economic data about retail sales. Each of the 32 economists polled by the news service forecast borrowing costs to stay at 2.5 percent.
"The Aussie is rallying due to a small language change, as the market sees the removal of the scope line as a signal that they are done," interest-rate strategist Matthew Johnson with UBS AG in Sydney told Bloomberg on Tuesday. "It's ironic as a higher Aussie dollar makes a cut more likely."
The Aussie's climb on Tuesday was about 0.6 percent, which augmented its gains of 0.9 percent on Monday. The U.S. was observing Labor Day so U.S. markets were closed and the greenback was idle.
Governor Glenn Stevens with the central bank of the South Pacific nation said borrowing costs would not change while noting the national economy remains strong, according to The Wall Street Journal.
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