Australian Dollar Rangebound Ahead of Inflation Data, Central Bank Speech

 
   By James Glynn 
 

        SYDNEY--The Australian dollar continued to circle in a narrow range just above six-year lows on Tuesday, ahead of crucial second-quarter inflation data and a speech by the central bank governor due Wednesday.
        At 0555 GMT, the Australian dollar was trading at US$0.7343, down from US$0.7386 late Monday.
        Reserve Bank of Australia Gov. Glenn Stevens will speak on economic policy matters. Coming just after the inflation report, also due Wednesday, the speech will attract added interest.
        Earlier Tuesday, the RBA published minutes of its July 7 policy meeting, highlighting signs of improvement in the job market over recent months.
        Recent data on job vacancies "suggested that demand for labor could be sufficient to maintain a stable or even falling unemployment rate in the near-term," the RBA said.
        Still, the central bank remained cautious overall, noting evidence of spare capacity in the economy, historically low wage growth, while adding that at 6.0%, the unemployment rate was still elevated.
        Slowing population growth had helped stabilize the unemployment rate this year, it added.
        Su-Lin Ong, a senior economist at RBC Capital Markets, said the optimistic discussion of the job market was noteworthy. Still, if it was being driven by slowing population growth and record low wage growth, it wasn't a particularly desirable trend long-term, she added.
        The central bank will publish revised economic forecasts in early August.
        The RBA indicated that interest rates will remain on hold for now at a record low of 2.0%, saying incoming economic data will determine whether the current stance of policy remains appropriate.
        Minutes from the latest policy meeting at Australia's central bank suggest an easing bias "of sorts," said Paul Brennan, chief economist at Citigroup.
        Still, the minutes revealed a moderately dovish spin on recent developments and that the board is still unsure whether the current stance "remained appropriate," he added.
        Further easing still could be needed, Mr. Brennan said.
        The RBA also noted that the Australian dollar has recently fallen to six-year lows against the U.S. dollar, but said further declines were needed against other major trading currencies.
        "Although the exchange rate against the U.S. dollar was close to levels last seen in 2009, the decline in the Australian dollar had been more modest in terms of a basket of currencies," the RBA said.
        -Write to James Glynn at james.glynn@wsj.com
        (END) Dow Jones Newswires

        July 21, 2015 02:28 ET (06:28 GMT)

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