RBA

Australian dollar closes higher on back of firmer euro | News.com.au

I never know how to measure the timing......


THE Australian dollar closed higher on Tuesday as the local unit followed an afternoon rally of the eurozone currency.

At 1700 (AEDT), the Australian dollar was trading at $US0.8932/37, up 0.74 per cent from Monday's close of $US0.8867/71.

Between 0700 (AEDT) and the local close, the unit traded between $US0.8877 and $US0.8944.

"The euro rebounded in the afternoon and the Aussie and Kiwi rode on the back of it,'' Westpac senior currency strategist Sean Callow said.

Mr Callow said the local currency remained in a fairly narrow range during afternoon trade before firming on the coat-tails of a stronger euro from around 1530 (AEDT).

The release of the minutes of the Reserve Bank of Australia's (RBA) monthly meeting on February 2 had a small effect on the local currency, Mr Callow said.


The RBA said its decision to leave the cash rate unchanged at 3.75 per cent on February 2 was "finely balanced''.

RBA board members said further rate increases were possible if the economy continued to improve as predicted.

"But they did not regard that outlook as requiring an increase at every meeting, and they saw the earlier moves to begin withdrawing monetary stimulus promptly as affording the board a degree of flexibility in its subsequent decisions,'' the minutes said.

"This allowed the possibility of waiting to receive some more information on how the economy was responding to the monetary tightening that had already occurred.''

The Australian dollar fell from $US0.8895 to $US0.8875 within minutes of the release of the minutes but had then held steady, Mr Callow said.

"It was relatively quiet through the RBA minutes,'' he said.

Mr Callow said currency markets were quiet today following the public holiday in the US on Monday and many Asian centres closed for Chinese New Year celebrations.

Thin trading conditions can exacerbate movements on foreign exchange markets, Mr Callow said.

Economic events due in the US during today's offshore session include the Empire Manufacturing survey and the ABC Consumer Confidence index, both for February.

Mr Callow forecast the Australian dollar to move between $US0.8905 and $US0.8975 during offshore trade.