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Dollar treads water, RBA eyed

The local unit is awaiting direction from US payrolls and the RBA, despite the market pricing just a 6pc chance of a rate cut.

The Australian dollar was little changed in late afternoon trade on Friday, ahead of US employment data later in the session and a central bank policy meeting next week.

At 5.50pm (AEST), the Australian dollar was trading at US72.53 cents, compared with US72.77c at the same time on Thursday.

Traders said Aussie dollar has had a difficult time this week capitalising on news of strong first-quarter GDP growth, said Stephen Innes, senior currency trader at OANDA Australia and Asia Pacific.

The Aussie has given back earlier gains as traders sense the RBA will reintroduce a clearly defined easing bias next week, he added.

Economic activity data have generally printed with a solid tone in Australia over the past month, suggesting the RBA has time on its side to deal with the issues presented by a structurally lower inflation outlook, said Sally Auld, chief economist at JPMorgan.

“We expect no move next week, but do think the RBA will adopt a formal easing bias,” she said.

Interest rate futures markets on Friday reflected just a 6 per cent change of a cut in the cash rate at the RBA’s policy meeting Tuesday, with bets rising to around 80 per cent of a cut by November.

The RBA lowered its cash rate target by one quarter of a percentage point to a record low 1.75 per cent in May, citing low inflation and flat wages growth for its first reduction in a year.

Dow Jones newswires

Original URL: https://www.theaustralian.com.au/business/markets/dollar-treads-water-rba-eyed/news-story/c9d110bc64d1cbc6a3b9466d3e760486