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US dollar adrift in calm seas; Australian dollar eyes RBA squall
[SYDNEY] The dollar, euro and yen started trade on Tuesday in familiar territory, having shuffled sideways as uninspired traders waited for bigger fish to fry after the latest readings on global manufacturing activity failed to provide fresh impetus.
The dollar index was barely changed at 96.884 after drifting between 96.635 and 96.965 all of Monday. The euro was hemmed in a tight US$1.1000 to US$1.1053 range and last stood at US$1.1015.
Against the yen, the greenback was equally restrained at 120.78 with Japan on holiday, while the euro was a touch firmer near 133.00.
A crop of industry surveys on Monday pointed to another subdued month for manufacturers across the globe, though a rise in new orders offered hope the United States might have seen its worst.
"Currencies, for the most part, took a back seat in a largely so-so session for broader financial markets... investors appear to be in a holding pattern ahead of bigger event risks later in the week," said Raiko Shareef, currency strategist at BNZ.
US jobs data on Friday is the key feature for the week. On Tuesday, the spotlight falls on an interest rate review by the Reserve Bank of Australia (RBA), where a decision to hold or cut remains too close to call.
The RBA will announce its decision at 0330 GMT.
The Australian dollar appeared to be counting on the central bank to maintain the status quo, rising to US$0.7145 from Monday's trough of US$0.7105. "The house view is for the RBA to keep its policy rate on hold at 2.0 per cent. This will temporarily lift Australian swap rates and AUD," said Elias Haddad, senior currency strategist at Commonwealth Bank.
Debt markets imply just under a 50-50 chance of a rate cut, so a move would definitely trigger a big price response.