WSJ:Australian Dollar Up; Caution Ahead of US Payrolls Data, RBA Meeting
By JAMES GLYNN
SYDNEY—The Australian dollar was higher late Friday in Asia supported by strong U.S. economic data overnight, but traders remained cautious ahead of more economic data and high risk events in the next week.
At 0610 GMT the Aussie dollar was buying US$1.0386 compared with US$1.0365 late Thursday in Sydney.
U.S. payrolls later today are the immediate focus for the markets, with the outcome expected to be a factor in next week's U.S. presidential election, in which polling remains close between the two major parties.
Economists surveyed by Dow Jones Newswires expect an increase of 125,000 jobs, compared with 114,000 in September.
Locally, economists are predicting the Reserve Bank of Australia will cut interest rates again next week, adjusting policy as economic growth slows.
A survey of 15 economists by Dow Jones Newswires Friday showed 11 expecting a cut in the RBA's cash rate target to 3.0% from 3.25%.
Economists are also expecting data next week to show unemployment rose in October to 5.5% from 5.45 in September, an outcome that would provide immediate justification for the RBA rate cut.
The high Australian dollar is also likely to be a factor in deciding to cut interest rates, economists said.
RBA board members interviewed by Dow Jones Newswires in October showed the elevated currency is a concern for policy makers.
The RBA has also begun accruing foreign exchange reserves in the last two months, signaling to markets its concern that the high Australian dollar is causing damage in areas such as manufacturing.
"We think it will be a line-ball call next week because, in our view, the Bank has every reason to ease policy further now," said the ANZ Bank ANZ.AU -0.71% in a market note.
Market pricing suggests around a 50% probability of a rate cut. The RBA has already lowered its cash rate by 1.5 percentage points in the last year.
