FED:RBA cash rate decision sees $A rally DOLLAR AUST WRAP
By Belinda Merhab
SYDNEY, Oct 1 AAP - The Australian dollar has rallied after the Reserve Bank left the cash rate on hold and gave a more upbeat assessment on the state of the economy.
At 1700 AEST on Tuesday, the local unit was trading at 94.20 US cents, up from 93.08 cents on Monday.
The Aussie dollar climbed from 93.39 US cents to 94 cents and above following the RBA's 1430 AEST announcement that the cash rate would remain at the record low of 2.5 per cent.
In a statement accompanying the decision, RBA governor Glenn Stevens said cash rate cuts since late-2011 had supported interest-sensitive spending and asset values.
"The full effects of these decisions are still coming through, and will be for a while yet," he said.
Inflation had been consistent with the medium-term target, and the Australian dollar, although recently higher, was still about 10 per cent below its level in April, Mr Stevens said.
The local currency rallied on the upbeat comments from Mr Stevens, BlackRock head of Australian fixed income Steve Miller said.
"We had a slightly more upbeat assessment of the economy from the RBA," Mr Miller said.
"It appears the market was looking for a bit more hand wringing about the Aussie dollar and I don't think they got it.
"They're telling us that we probably shouldn't be looking for a rate cut this year."
A government shutdown in the United States had very little influence on the Australian dollar, Mr Miller said.
At 1700 AEST, the Australian dollar was at 92.27 Japanese yen, up from Monday's close of 91.08 yen, and at 69.35 euro cents, up from 69.01 euro cents.
Meanwhile, Mr Stevens' upbeat statement pushed Australian bond prices lower.
At 1630 AEST on Tuesday, the December 10-year bond futures contract was trading at 96.095 (implying a yield of 3.905 per cent), down from 96.140 (implying a yield of 3.860 per cent) on Monday.
The December three-year bond futures contract was at 97.070 (2.930 per cent), down from 97.140 (2.860 per cent).