Aussie dollar slightly softer in midafternoon, as RBA eyed

Investors were cautious in midafternoon trade, ahead of a speech by the Reserve Bank’s Philip Lowe.

The Australian dollar was slightly softer in midafternoon trade, ahead of a central bank policy statement on Friday.

At 3.31pm (AEDT), the Australian dollar was at US76.22 cents, down slightly from US76.43c on Wednesday.

The Reserve Bank of Australia’s latest batch of economic forecasts is due on Friday, with some economists expecting the inflation outlook to be revised higher.

RBA Governor Philip Lowe sounded upbeat on the economy on Tuesday, saying he was confident it would bounce back from a contraction in the third quarter.

The board of the RBA left interest rates unchanged on Tuesday at a record low 1.5 per cent.

Mr Lowe said on Tuesday the forecasts will show an expected return to GDP growth of 3 per cent over time, while inflation projections will be largely unchanged.

The RBA governor will make a speech at 8pm (AEDT) on Thursday night, in his first address this year.

Traders said that any mention of global uncertainties, including the Trump administration and Brexit, by Mr Lowe could cause the Australian dollar to react.

Earlier, a quarterly survey showed business confidence and conditions were lower in the fourth quarter.

“Business conditions have remained a little above their long-run average levels, although it did soften through the second half of 2016,” said NAB Group chief economist Alan Oster.

“The relative stability of business confidence gives us some comfort, although we still think it has to improve from here to encourage the degree of business investment the economy needs,” he said.

Dow Jones newswires