SINGAPORE- The US dollar was tentative on Tuesday ahead of testimony by US Federal Reserve chair Jerome Powell, while the Aussie slid after the Reserve Bank of Australia raised its cash rate by 25 basis points but tempered hawkishness in its statement.
The Australian dollar eased to a more than two-month low of $0.6690 and was last down 0.33 percent at $0.6712 after the central bank raised its cash rate to the highest in more than a decade at 3.60 percent, as expected.
The RBA changed a reference to further rate “increases”, saying instead that “further tightening” would be needed, suggesting that the central bank might be nearing the end of its cycle of increases.
“An initial glance at RBA’s statement suggests they are nearing the end of the tightening cycle, and perhaps one step closer to publicly discussing a pause,” said Matt Simpson, senior market analyst at City Index.
Meanwhile, the US dollar index, which measures it against six major rivals, fell 0.077 percent to 104.170, having slipped 0.26 percent overnight. The index is down 0.6 percent for the month following a 2.6 percent gain in February.
The euro was up 0.11 percent to $1.069, extending its nearly 0.5 percent rise overnight. Sterling was last trading at $1.2044, up 0.19 percent on the day, while the kiwi rose 0.27 percent to $0.621.
The Japanese yen was mostly flat at 135.94 to the dollar ahead of the final policy meeting for Bank of Japan Governor Haruhiko Kuroda on Thursday and Friday.
Investor attention will firmly be on Powell’s testimony before Congress on Tuesday and Wednesday, with the February jobs report due on Friday also keenly awaited.
Kevin Cummins, chief economist at NatWest Markets, said Powell would likely express heightened concern about inflation but would probably stop short of raising expectations for a 50 basis point rate increase on March 22. – Reuters
