The Australian dollar was little changed yesterday in Asian trading, in a muted response to remarks from US Federal Reserve chairman Ben Bernanke that the world's largest economy still had quite a way to go towards recovery, despite recent signs of improvement.
Investors took some comfort from Mr Bernanke's indications that he plans to stick with the unconventional programs the central bank is using to lift output. That cleared some confusion caused by the most recent Fed policy meeting minutes, which suggested that the central bank could end its bond-buying program sooner than many had expected.
"Bernanke has adopted a middle of the road approach. His comments seem very measured and the result is a muted market reaction," said Tim Waterer, currency strategist at CMC Markets.
At 5pm AEDT, the dollar was buying $US1.0548, down US0.08c.
Investors awaited local jobs figures for December, due tomorrow, for clues as to whether Australia's central bank would cut interest rates again next month. Economists surveyed by Dow Jones Newswires said they expected the unemployment rate to have risen to 5.4 per cent, from 5.2 per cent in November.
Sally Auld, a debt strategist at JPMorgan, said a February rate cut was unlikely.
"Despite the fact that many economic indicators remain at depressed levels, there has been some better momentum in the Australian data flow of late," Ms Auld said.
Ten out of 16 economists polled by Dow Jones on Friday expected the cash rate to remain unchanged next month.
The Reserve Bank last month cut its benchmark lending rate to 3 per cent, matching a low reached in the global financial crisis. The central bank is attempting to boost growth in non-mining sectors of the economy amid slowing demand for resources from China, the country's biggest trading partner.
Benchmark prices for iron ore, Australia's biggest export, have rebounded nearly 80 per cent since September as Chinese imports of the steelmaking commodity recovered along with an improvement in the country's economy. But prices for other exports, such as coal, have not rallied.
Rio Tinto said yesterday it had approved a major expansion of its Australian iron ore mines, in the latest sign that higher iron ore prices are rekindling mining investment in the resource-rich economy. Still, Ms Auld said the recent rise in the iron ore price was "largely neutral" for the central bank.
Source:
http://www.theaustralian.com.au/business/markets/dollar-steady-amid-us-caution/story-e6frg916-1226554661000
