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Australian dollar strengthens after RBA leaves rates unchanged

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The Australian dollar headed for its biggest gain in two weeks after the central bank left interest rates unchanged and said inflation was expected to pick up.

[SYDNEY] The Australian dollar headed for its biggest gain in two weeks after the central bank left interest rates unchanged and said inflation was expected to pick up.

The Aussie strengthened for a third day as Reserve Bank Governor Philip Lowe said forecasts for output growth and inflation were little changed from those of three months ago. While inflation was expected to remain low, the central bank said it saw the measure "climbing gradually" over the next two years.

"The RBA statement is relatively upbeat," said Jarrod Kerr, a senior rates strategist at Commonwealth Bank of Australia in Sydney.

The central bank has "chosen to conserve energy and ammunition. It is still too early to call the end of the easing cycle, but that's now a discussion for 2017," he said.

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The Aussie advanced 0.6 per cent to 76.54 US cents as of 3:22pm in Sydney, headed for its biggest one-day gain since Oct 19.

Mr Lowe kept the cash rate at a record-low 1.5 per cent as predicted by 22 of 28 economists surveyed by Bloomberg. The RBA is scheduled to release its updated growth and inflation forecasts on Friday.

BLOOMBERG

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