Australia’s dollar rose for a fifth day amid speculation the Reserve Bank of Australia will keep interest rates unchanged at a policy meeting Tuesday.
The Aussie’s longest rally since March has added more than 1 percent to the currency’s value against the greenback, paring its loss over the past four weeks to 0.3 percent. The South Pacific nation’s currency has gained against nine of its 10 major peers this quarter. The RBA will hold the cash rate target steady at 1.5 percent, according to economists in a Bloomberg survey, after cutting rates in May and August.
“Focus is shifting to whether the RBA, which is expected to keep rates on hold today, eases in November,” Masafumi Yamamoto, chief currency strategist at Mizuho Securities Co. in Tokyo, wrote in a research note. “In this environment, there is risk for a further Aussie strengthening if the RBA’s statement shows its monetary stance would return to neutral in the future or fails to suggest future easing.”
The Australian dollar rose 0.3 percent to 76.03 U.S. cents as of 9:57 a.m. in Tokyo.
Tuesday’s RBA meeting would be the last for outgoing Governor Glenn Stevens to preside over. The Australian currency is underpinned as commodity prices have regained some of their losses, and the economy in China, Australia’s biggest trading partner, appears to be stabilizing. Disappointing U.S. jobs data for August also helped the Aussie as it weakened the case for a Federal Reserve rate increase at its Sept. 20-21 meeting.
“People are really looking forward to what’s happening in the Fed decision later this month, so that’s going to be suppressing volatility a little bit,” said Matt Simpson, a senior market analyst at ThinkMarkets in Singapore. “Today, I’m not really expecting any changes from the RBA and that might end up helping support the Australian dollar. We can trade above 76 U.S. cents today.”
By: Chikako Mogi and Lilian Karunungan (Bloomberg News).
Photo: Pound Sterling Live.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
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