Australian Dollar Meanders Amid Rates Debate

 
   By James Glynn 
 

        SYDNEY--The Australian dollar was meandering Friday with little fresh news to drive the currency either up or down.
        The Australian dollar was trading at US$0.7695 at 0630 GMT, virtually unchanged from a day earlier.
        Traders have been groping for new leads after the central bank surprised markets Tuesday and left its cash-rate target steady at 2.25%.
        But expectations the Reserve Bank of Australia will cut rates in May remain high.
        Shane Oliver, chief economist at AMP, said an interest-rate cut looks inevitable as commodity prices continue to fall.
        "The RBA will have to act on its easing bias as the blow to national income from the falling iron-ore price has intensified," Oliver said.
        A poor investment outlook is also pointing to continued subpar growth, while inflation remains benign and the Australian dollar is still too high, Mr. Oliver said.
        Still, some argue the hurdle for a cut in the RBA's benchmark cash rate to 2.0% from 2.25% might be higher than thought.
        Adam Boyton, chief economist at Deutsche Bank, said it would be difficult for the RBA to not lower interest rates next month if its economic forecasts are revised lower in May. But the fact that it hasn't already acted suggests the hurdle to cut from an already low level is high, with 2.00% likely to be a cyclical low.
        Meanwhile, housing-finance data showed that recent concerns over strong house-price growth might be overstated.
        The value of loans for investment housing fell 3.4% from January, the Australian Bureau of Statistics said Friday. It was the largest monthly fall in investor finance since January 2012.
        Write to James Glynn at james.glynn@wsj.com
        (END) Dow Jones Newswires

        April 10, 2015 03:08 ET (07:08 GMT)

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