FOREX-Aussie pressured after suprise RBA decision

* Aussie falls as RBA surprises by holding rates at 3.75 pct

* Dollar and yen rise as Aussie falls after RBA

* Analysts say Aussie may have further room to fall

* Market eyes White House adviser Volcker’s testimony

(Adds quotes, updates prices, changes dateline prvs TOKYO)

By Neal Armstrong

LONDON, Feb 2 (BestGrowthStock) – The Australian dollar tumbled on
Tuesday after Australia’s central bank kept interest rates on
hold, sparking a sell-off in risk trades and boosting demand for
lower-yielding currencies such as the yen and the dollar.

A Reuters poll had shown all 20 economists surveyed
expecting the RBA to raise rates by 25 basis points, while
markets had been more cautious, factoring in around a 70 percent
chance of an increase.

By 0845 GMT, the Australian dollar was testing a five-week
low against the U.S. dollar at $0.8782 (AUD=D4: ) hit after
shedding around 1.4 percent on the announcement.

Against the yen (AUDJPY=R: ) it also shed around 1.4 percent,
as carry trades came under pressure.

“The Australian dollar sold off as investors reconsidered
their long positions versus the U.S. dollar, the yen and the New
Zealand dollar in particular,” said Lauren Rosborough, a
currency strategist at Westpac.

“There may be more room on the downside, with the December
Aussie/dollar (AUD=: ) low at $0.8735 now a key level to watch.”

Risk sentiment will be under scrutiny later when White House
adviser Paul Volcker appears before the Senate Banking Committee
to defend the administration’s proposal to limit risk-trading by
banks, which spooked investors and triggered a sell-off in
equities when it was unveiled last month.

According to testimony obtained by Reuters, Volcker will
urge Congress to curb the risks taken by large banks to help
prevent them from being treated as “too big to fail.”

“If Volcker says anything specific about possible
regulation, equities may react negatively and the dollar and the
yen may both strengthen,” said Minoru Shioiri, chief manager of
FX trading at Mitsubishi UFJ Securities.

The yen had trimmed earlier gains versus the euro to trade
down 0.2 percent on the day around 126.01 yen (EURJPY=R: ), though
the Japanese currency remained in favour against the Australian
dollar, trading up roughly 1.4 percent at 79.60 yen.

The dollar was trading flat versus a basket of currencies
(.DXY: ) at 79.20, though still close to its recent six-month
highs of 79.534.

The euro (EUR=: ) recovered from losses to trade unchanged at
$1.3920 after initially dropping to $1.3886 on the RBA decision.
Investors were eyeing euro zone producer prices data, due for
release at 1000 GMT.

Greece’s fiscal problems continued to weigh on the euro,
analysts said, though the currency showed little reaction to
Greek Prime Minister George Papandreou telling a conference the
level of Greek bond spreads over euro zone benchmarks was
completely unjustified.

Markets were also awaiting a speech by European Central Bank
Governing Council member Vitor Constancio, who is also head of
the Portuguese central bank.

Stock Market

(Additional reporting by Masayuki Kitano in Tokyo; editing
by Nigel Stephenson)

FOREX-Aussie pressured after suprise RBA decision