Australian Dollar Marks Time Before Data Steam

 
   By James Glynn 
 

        SYDNEY--The Australian dollar kept to a narrow range in Asia Friday ahead of crucial U.S. employment data for April in coming hours, but also a raft of data next week and a central bank board meeting.
        At 0710 GMT the Australian dollar was trading around US$0.9274 compared with US$0.9291 late Wednesday.
        U.S. employment data, which is critical to the outlook of Federal Reserve policy over the next year, is expected to show nonfarm payrolls rose by a solid 215,000 and the jobless rate slipped to 6.6% from 6.7% in March.
        Locally, a Reserve Bank of Australia policy meeting on Tuesday could weaken the Aussie dollar, especially if recent weak first-quarter inflation data hardens the central bank's current on-hold policy stance.
        No change in the RBA's cash rate target, now at a record low of 2.5%, is expected by the markets.
        "The Reserve Bank is likely to retain its preference for a period of stability for interest rates, which may fail to reinvigorate the Aussie," said David de Ferranti, market Analyst at FXCM.
        "We'd need to see a material improvement in the local data to really bolster expectations for a rate hike from the central bank, which would in turn would help lift the Australian dollar," he added.
        Shane Oliver, head of economic research at AMP Capital, said the Australian dollar is likely to fall further near term as a short-covering rally that fanned gains in recent months loses steam. He tips a move back to US$0.8000.
        "With Australian dollar short positions now largely unwound, it's likely that the short covering rally in the Australian dollar, is now largely over and that the broad downtrend is likely to resume," Mr. Oliver said.
        "Commodity prices remain relatively soft and the Australian dollar is likely to revert to levels that offset Australia's relatively high cost base," he added.
        Domestic data to be published early next week include building approvals, job ads and trade data.
        Write to James Glynn at james.glynn@wsj.com
        (END) Dow Jones Newswires

        May 02, 2014 03:35 ET (07:35 GMT)