$A closes flat after RBA minutes
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AAP
2010-03-16
The Australian dollar closed flat after the minutes of the Reserve Bank of Australia's March 2 board meeting cooled market expectations of an April rate rise.
At 1700 AEDT, the Australian dollar was at $US0.9155/57, up slightly from Monday's close of $US0.9143/45.
Since 0700 AEDT, the local unit has traded in a narrow range between $US0.9153 and $US0.9120.
HiFX senior consultant Derek Mumford said the minutes of the RBA's March 2 board meeting released during the session had little to no impact on the Australian dollar.
"The minutes were pretty much as expected," he said.
"Nothing that came out was a shock to the market.
"The Aussie is really struggling to break 92 US cents."
In the minutes, the RBA said it lifted the cash rate to four per cent in early March in response to two months of data suggesting the economy might be growing at or close to trend.
"Members concluded that the evidence that had become available recently had confirmed that it remained appropriate for interest rates to move gradually towards normal levels, and that it was time to make take another step in that direction," the minutes said.
The futures market has since priced in a 35 per cent chance the bank will take rates to 4.25 per cent in April, down from 40 per cent who expected the rate rise in the hours before the minutes were published at 1130 AEDT.
Mr Mumford said investors will turn their attention to the US' own monetary policy decision due at 0515 AEDT on Wednesday.
While very few are expecting the US Federal Reserve will lift its target cash rate off its current zero to 0.25 per cent target range, Mr Mumford said market observers were keenly waiting a change in tone from the Fed.
He said the Fed is expected to give between two to three months notice before they do lift their target rate.
Mr Mumford said, however, a sudden lifting of the US cash rate would see a "sharp decline in the Australian dollar."
At 1600 AEDT, the RBA's trade weighted index (TWI) was at 71.1 points, where it closed on Monday.
