The dollar was broadly steady in Asian trading on improving risk appetite following a strong close on Wall Street for US equities on Monday. Asian stocks also extended their gains on Tuesday, boosted by lowered expectations of the Fed raising interest rates this year after last week’s poor jobs data. Yesterday’s disappointing ISM non-manufacturing composite and service PMI numbers had limited impact on the dollar.
The Reserve Bank of Australia kept its cash rate unchanged at 2.00% today as expected, although some analysts had forecast that the RBA would cut rates by 0.25%. The Australian dollar jumped against the greenback after the announcement, climbing from 0.7076 to 0.7133 before easing to 0.7110. The statement that followed the decision was mostly dovish saying that “monetary policy needs to be accommodative”. However, the aussie was boosted on toned down comments that the currency is “adjusting to the significant declines in key commodity prices”.
The aussie’s rise had limited impact on the kiwi, which briefly climbed to 0.6514 against the greenback before falling back to 0.6493 in late Asian session.
All eyes will now be on the Bank of Japan, which starts its two-day meeting today and is due to announce its decision tomorrow, with some expecting the Bank of Japan to announce an expansion of its stimulus program.
The yen attempted to claw back some of its losses since Friday in late Asian session. The dollar dropped slightly to 120.25 yen, while the euro eased to 134.59 yen, down from yesterday’s peak of 135.70 yen.
Weak German factory orders out this morning had little impact on the euro. German factory orders fell by 1.8% month-on-month in August, sharply below forecasts of a 0.5% increase. This could be sign that the slowing economy in China is reducing demand for German produced goods.
But the euro shrugged off the data and rose against the dollar and sterling. The single currency rose to 1.1196 against the greenback and advanced to 0.7391 against the pound. Weaker than expected house prices from Halifax weighed on the pound in late Asian trading, with cable falling to 1.5157.
Oil prices were flat on Tuesday, holding on to their recent gains. WTI crude oil futures were down slightly to $46.14.
Looking ahead to the rest of the day, US trade figures will be the only major data to look forward to, but a speech by ECB President Mario Draghi at 17:00 GMT may also attract some attention.
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