Mixed trading for Australian dollar on RBA speech, consumer sentiment, BoJ

"We got a little bit of a dip on Mr Stevens' comments about being open to another cut, but the recovery back was a broad-based US dollar sell-off led by the comments of the Bank of Japan governor," said National Australia Bank's global co-head of foreign exchange strategy Ray Attrill.

Both central bank governors' comments helped create a perfect storm which started with gloomier-than-expected consumer confidence surveys from both ANZ-Roy Morgan and Westpac-Melbourne Institute.

Both found that the sentiment bounce from May's Federal budget had proved short-lived, with headline indices dropping sharply on previous readings.

The RBA governor, meanwhile, attempted to talk down - or "jawbone" - the dollar while warning of persistent weaknesses in the Australian economy.

Importantly for currency traders, he also left the door wide open to further easing this year.

"We remain open to the possibility of further policy easing, if that is, on balance, beneficial for sustainable growth," he said.

Mr Stevens again alluded to the so-called "currency wars", involving competitive easing by countries in an effort to weaken sovereign monetary units to help exporters.

"A further fall in the exchange rate, which is not assumed in the [RBA] forecasts, would add both to growth and prices," he said.

"If one thinks that such a decline at some point is likely, that constitutes an upside risk.

"Of course, the list of countries that would prefer a lower exchange rate is a long one and we can't all have it," the RBA governor said.

His speech, which also covered household debt, Sydney property prices and the global economy, immediately triggered Aussie selling, with the currency plunging more than one-third of a US cent before news from the Bank of Japan hit markets and reversed the fall.

"Where was this easing bias on June 2 when we needed it?," asked TD Securities' chief Asia-Pacific macro strategist Annette Beacher.

"The day the RBA paused at 2 per cent, it didn't offer any forward guidance - so in the aftermath of that combination the Australia dollar climbed from US76.40¢ pre-announcement to a high of US78.20 the next day," she said.

"We suspected that the RBA governor 'on his own' would take the opportunity to jawbone the currency lower, and he delivered."

Mr Stevens also appeared to undo some of its own attempts to talk the Aussie down, referring in a post-speech question and answer session to Sydney house prices as "crazy".

"This suggests a very high hurdle for further easing in the near term," National Australia Bank chief economist for markets Ivan Colhoun said.

JP Morgan's chief economist for Australia Stephen Walters described the comments as "a marked step up in the rhetoric on this issue".