Australian dollar becalmed ahead of data

The Australian dollar was little changed today ahead of a massive week of data and comments from the central bank next week.

The Australian dollar was little changed today ahead of a massive week of data and comments from the central bank next week.

The Australian dollar was trading at US72.83c at 5pm, down from US73.01c late yesterday.

the Reserve Bank of Australia central bank will meet on Tuesday and is widely expected to keep its cash rate target at a record-low 2 per cent, while still pointing to the risk of a further cut.

Still, some warn that the meeting might not be so benign.

Recent commentary by RBA Governor Glenn Stevens suggests he is not in a hurry to cut rates again, said Shane Oliver, chief economist at AMP Capital.

However, he added that the odds were strongly skewed in favour of another cut, “if not Tuesday then in the months ahead, thanks to the bleak outlook for investment, continued sub-par economic growth, the Aussie dollar still being too high”.

The RBA has already cut interest rates twice this year to support the economy in the face of slowing growth and tumbling commodity prices.

Data earlier today highlighted the dilemma for the central bank in contemplating a further rate cut. The RBA has warned that even lower interest rates could overheat the housing market.

The Housing Industry Australia Affordability Index fell in the second quarter as the positive impact of a second interest rate cut for the year in May was overwhelmed by an increase in median house prices.

The Index fell by 2.9 per cent to 79.7 over the second quarter from the first. Affordability deteriorated by 3.6 per cent in capital city markets, driven by Sydney and Melbourne.