Aussie very subdued in APAC trade

[REUTERS SYDNEY] The Australian and New Zealand dollars treaded water against the greenback in holiday-thinned trade on Monday, with both currencies headed for their best monthly gains since early 2016.

Liquidity in Asia was lighter than usual with financial markets in Hong Kong, China and Singapore shut for the Lunar New Year holiday.

The Australian dollar held at US$0.7551, not too far from its 2-1/2 month peak of US$0.7609 touched last week. It is already up nearly 5 per cent this month, on track for its best monthly performance since March 2016.

The currency has been swinging in a tight 75-76 US cent band, having struggled to stay above 76 cents after disappointing domestic inflation figures last week underlined the risk that interest rates were more likely to move down than up this year.

Some analysts expect the Australian dollar to weaken if inflation fails to hit the Reserve Bank of Australia’s (RBA) target band and if the country’s red-hot housing market slows down.

“The sentiment has shifted from a possible RBA rate hike bias to a greater chance of an interest rate cut,” said Stephen Innes, senior trader at Oanda.

“If a slowdown in the Australian housing market unfolds as some expect, an RBA rate cut will be on the table in 2017. If this likelihood becomes a reality, look for the Aussie to move towards US$0.7000.”

THE BUSINESS TIMES via REUTERS

 

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Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes