The dollar was marginally stronger against the yen in Asian trade Tuesday on expectation of more easing by the Bank of Japan and up slightly versus the euro. The yen came under pressure on expectation that the Bank of Japan will consider more monetary easing at a meeting next week to stem downside risks for the economy. The dollar-yen pair rose to a high of around Y82.45 before easing slightly below that level. The euro was slightly lower, down to $1.2937 from $1.02942 early in Sydney, giving up some of the gains it made overnight after the currency fell in Asian trade Monday on weekend news of the resignation of Italian Prime Minister Mario Monti. The Australian dollar has been an underperformer this morning, falling to a low of around $1.0461 from $1.0487 after National Australia Bank’s November business survey showed a drop in confidence to the weakest level since April 2009 and conditions remained the lowest since May 2009. The survey is being closely watched by the Reserve Bank of Australia as it waits for signs of turnaround in non-mining businesses and non-residential building investments. The outcome was disappointing and increased expectations of more cash rate cuts from the RBA. While not the ‘be all and end all’ as far as RBA is concerned, the fact that business confidence continues to deteriorate despite lower interest rates does suggest that businesses are slow to respond to easier monetary policy. While we pencil in one final cut in mid-2013, today’s poor report does, at the margin, increase the chance that the RBA may have to act sooner rather than later. The New Zealand dollar, on the other hand, edged higher building on the gains in the last few days on stronger then expected economic data, and less than expected dovish monetary policy by the Reserve Bank of New Zealand. Supporting the New Zealand dollar this morning was a 0.7% increase in electronic card transactions in November compared with forecast for +0.5%, a report by REINZ that November house prices rose 7.3% year-on-year and ANZ’s Truckometer index which suggested the economy is growing strongly in the fourth quarter.
EasyForexNews Research Team