Dollar edges up in late trade

The Aussie has lifted closer to US74c as traders await the RBA’s minutes and UK referendum.

The Australian dollar remained largely fixed to its weeklong range on Friday, with attention in the market focused on next week’s UK referendum on membership in the European Union.

At 6pm (AEST), the Australian dollar was trading at US73.84 cents, compared with US73.64c late on Thursday.

While Australia’s trade with the UK is small, the dislocation in global bond, currency and equity markets from a vote in favour of a British exit from the EU could be substantial.

Paul Brennan, chief economist at Citigroup, said the direct trade and investment consequences for Australia of a so-called Brexit would be manageable, “but financial market and confidence impacts could be more substantial.”

The disruption to global markets wouldn’t be enough to spur an interest-rate cut by the Reserve Bank of Australia in July, but it would add to the case for a cut in August should inflation remained muted, he added.

Regional markets were shaky on Friday as debate around a possible Brexit entered its final week.

“Momentum will continue to be capped by Brexit uncertainty and moderate commodity prices over the short term,” said Stephen Innes, senior trader at OANDA Australia.

Markets will also be looking for cues from the the Reserve Bank’s coming policy-meeting minutes, set for release Tuesday. The RBA is still widely expected to cut interest rates in August in response to weak inflation.

David Plank, debt strategist at Deutsche Bank, said markets might be disappointed by a lack of information in the minutes.

“We doubt they will contain much for the market to respond to -- especially given the maintenance of a neutral policy bias by the Bank in the post-meeting statement (June 5),” Mr Plank said.

Dow Jones newswires