$A lower ahead of JoB meeting
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SYDNEY, Jan 22 AAP
January 22 2013, 12:17AM
The Australian dollar is lower, as the market awaits news from a meeting of Japan's central bank.
At 1200 AEDT on Tuesday, the Australian dollar was at 105.07 US cents, down from Monday's local close of 105.11 US cents.
Since 0700 AEDT, it has traded between 105.06 and 105.22 US cents.
CMC Markets chief market strategist Michael McCarthy said a much-anticipated meeting of Japan's central bank on Tuesday could provide some impetus for the Australian currency.
"The Aussie-yen cross has been one of interest recently," he said.
"We've pulled back from our most recent high of 95 yen. But, given the Bank of Japan (BOJ) meeting today, we suspect that might be where the action will be for the Australian dollar."
At 1200, the Australian dollar was trading at 105.07 Japanese yen.
The BOJ is expected to announce its inflation target, as well as potential asset purchases, when it concludes its two-day meeting on Tuesday.
Prime Minister Shinzo Abe - who was elected in December - is pushing for an inflation target of two per cent, and has said he supports strong stimulatory measures to boost the country's economy.
Mr McCarthy said a quarterly measure of inflation in Australia, due for release on Wednesday, would be the next focal point for the market.
"We (at CMC) are looking for a weaker headline reading of 0.5 (per cent), but expect that the core readings will come in at 0.7 per cent," he said.
"With that scenario, it will be quite a neutral result. But, if either of the core readings come in at 0.5 per cent, there is a real chance that the market will start speculating about a rate cut."
An AAP survey of 15 economists show the median expectation is for underlying inflation to be 0.65 per cent for the December quarter.
A low inflation reading could prompt the Reserve Bank of Australia (RBA) to consider cutting the cash rate at its next meeting on February 5. At its previous meeting, in December, the RBA cut the rate by a quarter of a percentage point, to 3.00 per cent.
Meanwhile, Australian bond prices were lower at noon.
At 1200 AEDT on Tuesday, the March 10-year bond futures contract was trading at 96.655 (implying a yield of 3.345 per cent), down from Monday's close of 96.665 (3.335 per cent).
The March three-year bond futures contract was at 97.230 (implying a yield of 2.770 per cent), down from 97.240 (2.760 per cent).