By Ian Chua
SYDNEY (Reuters) – The yen remained in the doldrums on Tuesday after a restless session overnight, while the Australian dollar held firm as investors bet the Reserve Bank of Australia will resist the recent trend for surprise policy easings.
The dollar bought 120.85 yen (JPY=), staying near a peak of 121.70 set on Friday after a shock cut in Japanese interest rates sent yen bulls packing.
The euro fetched 131.68 yen (EURJPY=R), also not far from a high of 132.45.
Against the greenback, the common currency flirted with $ 1.0900 (EUR=) after bouncing off a low of $ 1.0815. It was still well within a $ 1.0711-$ 1.0985 range seen in January.
Trading was subdued with cautious commentary from European Central Bank President Mario Draghi and Federal Reserve Vice Chairman Stanley Fischer keeping investors sidelined.
Draghi highlighted the risks facing the euro zone and reiterated the ECB was ready to review its monetary policy stance in early March.
Sounding equally wary, Fischer said it was “difficult to judge” the likely implications of recent volatility in global financial markets. His speech appeared to reinforce the view that a follow-up move to the December rate hike would be a long time coming.
Australia’s central bank is next in line to give the market an update on its outlook following its first policy review of the year on Tuesday.
All 32 analysts in a Reuters poll expect the RBA to hold rates at 2 percent for an eighth month, while leaving the door open to easing if necessary.
If nothing transpires from this event, the market will wait for the RBA’s quarterly monetary policy statement on Friday. The comprehensive report will include the central bank’s latest forecasts for growth and inflation.
“Our economists expect the RBA to leave rates unchanged and markets are pricing in only a marginal 5 percent probability of a move,” analysts at BNP Paribas wrote in a note to clients.
“That said, recent dovish surprises from the ECB, BOJ and RBNZ arguably caution against turning too complacent on the RBA, and there is scope for a more dovish signal in the statement of monetary policy released on Friday.”
The Aussie held just above 71 U.S. cents (AUD=D4), having recently bounced off a near seven-year trough of $ 0.6827.
The Canadian dollar was a standout currency, rising against the greenback even in the face of a sharp drop in oil prices. It climbed to a one-month high of C$ 1.3908 per USD (CAD=D4) and was last at C$ 1.3944.
Sterling was also in demand after a survey showed British factories enjoyed a brighter start to the year than expected thanks to surging output at large manufacturers.
The pound stood at $ 1.4426 (GBP=D4), after posting a 1.4 percent rally on Monday.
(Editing by Kim Coghill)
