Investing.com - The Australian dollar tumbled over 1% against its U.S. counterpart on Tuesday, after the Reserve Bank of Australia unexpectedly lowered interest rates by 0.25 basis points. The New Zealand dollar also moved lower, as disappointing Chinese manufacturing data weighed.
AUD/USD lost 1.23% to 0.7576, the lowest since April 27.
The RBA surprised markets on Tuesday by lowering its benchmark interest rate to 1.75% from 2.00%.
Commenting on the decision, RBA Governor Glenn Stevens said the rate cut was based on last week's surprisingly weak inflation reading.
Data showed last week that Australia’s consumer price index fell 0.2% in the first quarter, disappointing expectations for a 0.3% rise. Year-on-year, consumer prices increased by 1.3% in the three months to March, compared to expectations for a 1.8% gain.
Also Tuesday, the Australian Bureau of Statistics said that building approvals rose by 3.7% in March, confounding expectations for a 3.0% decline. Building permits rose 2.9% in February, whose figure was revised from a previously estimated 3.1% gain.
NZD/USD fell 0.23% to trade ar 0.7004.
Sentiment weakened after data showed that China’s Caixin manufacturing purchasing managers’ index ticked down to 49.4 in April from 49.7 the previous month, compared to expectations for a rise to 49.9.
The weak data added to concerns over slowdown in the world’s second largest economy.
China is Australia’s biggest export partner and New Zealand’s second biggest export partner.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.30% at an 16-month low of 92.26.