The Australian dollar was little changed late Monday as traders awaited a speech by Reserve Bank of Australia Gov. Glenn Stevens that might shed light on whether the central bank will continue cutting interest rates in the near term.
The Aussie dollar edged slightly higher to trade at US$1.0364 at 0630 GMT, compared with an intraday high of US$1.0378. That compared with US$1.0330 late Friday.
Mr. Stevens will speak in Melbourne Tuesday to a business forum.
The RBA left interest rates on hold this month at 3.25%, surprising economists who had expected it to cut the rate as a mining boom that has underpinned economic growth loses steam. The decision to pause came even after the central bank signaled it may downgrade its growth forecasts for the year.
Financial markets are still pricing a 60% chance of another cut in December, adding to the 1.50 percentage points of cuts announced in the last year.
Mr. Stevens' comments on the Australian dollar will also be crucial, traders say.
The RBA has been building foreign exchange reserves over the last three months to apply subtle downward pressure on the currency.
Ray Attrill, head of global currency strategy at National Australia Bank, NAB.AU +0.69% said the pressure from the RBA meant the Australian dollar was now unlikely to hit the 30-year highs above US$1.1080 it reached in 2011.
"This is especially the case in the event of any generalized U.S. dollar strength in coming months," he added.
The solid tone of the Australian dollar was also linked to comments over the weekend which raised hopes that talks over the so-called "fiscal cliff" would be resolved soon.
U.S. Treasury Secretary Timothy Geithner said he was confident an agreement to avert the fiscal cliff--a combination of automatic tax increases and spending cuts scheduled to start from January--could be concluded within weeks.
"The Australian dollar made a constrained move higher today with financial markets feeling slightly less anxiety about the fiscal cliff courtesy of some better-sounding rhetoric from Washington," said Tim Waterer, strategist at CMC Markets.
