TA:Australian dollar rises as RBA's Stevens offers no hint of rate cuts
THE Australian dollar was higher late today after Reserve Bank of Australia governor Glenn Stevens gave no hint of a policy-shift toward emergency interest-rate cuts, which continue to be priced in by financial markets.
In measured testimony to a parliamentary economics committee in Melbourne, Mr Stevens's said there were reasons to be cautious about the world economy, and he added that inflation risks look more balanced.
But at no time did the central bank governor prepare the way for cuts to the interest rate.
"Inflation bears careful watching but we can keep it under control," Mr Stevens told an influential cross-party economic committee.
Chris Weston, an institutional dealer at IG Markets, said there was little in what Mr Stevens said for those predicting worse to come from the global economy.
"It is clear that the central bank has moved away from a tightening bias. However, you certainly don't get an overbearing sense it has moved to an easing bias either.
"Anyone calling for a rate cut by the RBA in September will no doubt now push out that call to October, although it seems the RBA's wait-and-see mantra is still very much in play," he said.
Gains in the Australian currency were nevertheless measured as traders awaited a speech by US Federal Reserve chairman Ben Bernanke on the US economy.
Matthew Johnston, an interest rate strategist at UBS, said he expects Dr Bernanke to use "a very flat bat", meaning he'll be very cautious in his comments.
But ANZ economist Tom Kenny said the US Fed chairman could say something meaningful, given that he hasn't spoken since July 14, after which economic and financial indicators have dovetailed with debt worries in the US and Europe to build anxiety in global markets.
"Given much has happened since then (for example, the downward revisions to US GDP, the debt-ceiling debate, the S&P downgrade of US government debt and heightened equity-market volatility), his thoughts will be keenly scrutinised," Mr Kenny said.
At 4.40pm AEST, the Australian dollar was at $US1.0484, up from $US1.0439 late yesterday. Against the Japanese yen, the Australian dollar was at Y80.93, up slightly from Y80.42.Q
