Dollar steady as risk rally eases, RBA in focus
By Ankur Banerjee
SINGAPORE (Reuters) — The dollar was steady on Tuesday, holding overnight gains as investors took a breather from a risk rally, while the Australian currency drifted lower ahead of a central bank interest rates decision later in the day.
All eyes in Asian hours will be on the Reserve Bank of Australia, which is widely expected to raise rates by 25 basis points, snapping four months of on hold policy decisions. Markets on the other hand less sure, pricing in a 63% chance of a hike.
The Australian dollar was 0.23% lower at $0.6474, but remained close to the three-month peak of $0.6523 touched on Monday.
«I think the RBA will probably reiterate its tightening bias,» said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY). «Regardless of the outcome, there should be some volatility in the Aussie dollar today.»
The Aussie and the New Zealand dollar have rallied over the past few days after a benign U.S. jobs report led markets to price in rate cuts by the middle of next year, lifting risk appetite. The kiwi was off 0.15% at $0.59545.
The rally in bonds and equities last week looks to be fading, with yields higher at the start of the week and the market focus switching to a flurry of U.S. Fed officials due to speak this week.[US/]
Federal Reserve Bank of Minneapolis President Neel Kashkari said on Monday the U.S. central bank likely has more work ahead of it to control inflation.
Fed Chairman Jerome Powell is due to speak on Wednesday and Thursday, where the focal point will be on whether he maintains the more dovish tone struck after the Fed’s policy meeting last week.
«If Powell sounds a bit more hawkish to push back against the easing of financial conditions later this week… I
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