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Forex - Aussie gets a lift on retail sales data, awaits RBA rate views

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Investing.com -

Investing.com - The Aussie rebounded on Tuesday on better-than-expected retail sales and ahead of the latest central bank policy review and the yen strengthened as the Bank of Japan began a two-day policy meeting.

AUD/USD traded at 0.7599, up 0.09%, while USD/JPY changed hands at 119.59, up 0.04%. EUR/USD traded at 1.0939, up 0.16%.

The US Dollar Index, which measures the dollar against a basket of six major currencies, was quoted at 97.24, up 0.03%.

The RBA policy statement later in the day will set the tone for the Aussie with views mixed on the prospects for a 25 basis point rate cut from a record low 2.25%, though consensus sees stable rates.

Also in Australia, the AiGroup services index for March fell 1.5 points to 50.2, after exapnding for the first time in 12 months in February.

February retail sales rose 0.7%, well above the 0.4% gain seen, but and March ANZ job ads fell 1.4%, failing to make 10 increases in a row.

In Japan, The BOJ starts its two-day policy board meeting where it is expected to maintain its monetary policy target.

Overnight, the U.S. dollar rallied sharply against the euro on Monday, reversing previous losses after strong services data improved outlook for traders following Friday's disappointing U.S. jobs report.

European markets were closed since the end of last Thursday for Good Friday, as well as Easter Monday.

On Friday, the U.S. Bureau of Labor Statistics said in its monthly jobs report that the economy added 126,000 in March, halting a streak of 12 consecutive months of job growth that exceeded 200,000. The modest job increases nationwide marked the weakest period of hiring in 15 months. In terms of average weekly earnings, employees nationwide received the smallest annual gains in wages since last June.

The labor force participation rate, which measures the number of people who are either employed or actively looking for work, also painted a bleak outlook. During the month of March, the rate ticked down to 62.7%, the lowest level in 36 years.

In March, Federal Reserve chair Janet Yellen indicated that the Fed could begin raising interest rates when it was "reasonably confident" that inflation will move toward its target inflation of 2%. Yellen added that the Fed will take a "data-driven" approach to potential liftoff by keeping a close eye on wage and GDP growth before raising its benchmark Federal Funds Rate.

The substandard data pushed the dollar down on Monday morning, before it rebounded following the release of optimistic services data. EUR/USD moved in the opposite direction shortly after the release of the PMI Services Index, which rose to 59.2 in March, more than one-half point higher than March forecasts. The reading was also up more than two points from the final reading for February. A number of economists are looking at the service sector as a critical aspect of U.S. economic health.

Elsewhere, International Monetary Fund (IMF) head Christine Lagarde indicated that she is confident Greece will meet its obligation to make a €460 million payment to the fund by Thursday. Lagarde made the comments on Sunday night, following her meeting with Greece finance minister Yanis Varoufakis over the weekend in Washington.

"Minister Varoufakis and I exchanged views on current developments and we both agreed that effective cooperation is in everyone's interest," Lagarde said in a statement. "We noted that continuing uncertainty is not in Greece's interest and I welcomed confirmation by the minister that payment owing to the Fund would be forthcoming on April 9."

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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