Rates At 0500 GMT
Latest Change
AUD/USD 1.0488 +0.8%
AUD/JPY 80.7975 +0.7%
6.25% Apr, 2015 3.2922% +0.02
5.50% Apr, 2023 4.0866% +0.05
10-Yr Spread To U.S. +179 bps +3 bps
SFE Mar 3-Year Futures 96.74 -0.02
SFE Mar 10-Year Futures 96.07 -0.05
SYDNEY (Dow Jones)--In holiday thinned trade the Australian dollar returned to highs last traded in November but failed to breach resistance at US$1.0500. Most Asian markets were closed Monday for Lunar New Year celebrations.
Soft producer prices were the main focus for local traders with a 0.3% rise in the fourth quarter of 2011 from the third quarter coming in a touch lower than expected and prompting economists to forecast a benign consumer price index which is due on Wednesday, meaning the way is clear for more policy easing by the Reserve Bank of Australia.
"We doubt that today's data will feature much at the RBA's February board meeting, but benign pipeline price pressures nonetheless may offer some marginal support for the 25 basis points cut we continue to expect," said Michael Turner, a strategist at RBC Capital Markets.
The local unit largely ignored the release and continued to pull back from early session losses. At 0500 GMT, the Australian dollar was trading at US$1.0488 up from US$1.0400 late Friday. Against the Japanese yen the Australian currency changed hands at Y80.7975 up from Y80.72.
UBS strategists said the currency has already priced in an easing by the RBA in February.
"With rates markets already almost pricing in a 25 basis points cut, it may take a 50 basis points cut to start forcing the exchange rate back downwards in the absence of greater global risk aversion near term," strategists at the investment bank said in a note.
Europe continues to dominate sentiment. Ongoing discussions between investors and the Greek government over a planned debt restructuring are key for the near-term outlook ahead of an EU summit due on Jan. 30.
"Overall, we see the risk of disappointment being the catalyst for a further modest lift in the Australian dollar against the euro this week," said Joseph Capurso, a strategist at Commonwealth Bank of Australia.
-By Enda Curran, Dow Jones Newswires; 61-2-8272-4687; enda.curran@dowjones.com
