RBA Keeps Rates Steady - 3.4.2012

US Dollar The dollar weakened further against its major counterparts with the currency’s index sliding toward its 5-week low of 78.72. Yesterday the Institute for Supply Management reported its factory index rose last month by 1% to 53.4 from 52.4 in February, indicating improvement in the manufacturing sector. Moreover today reports may show US factory orders increased in February. The measure is expected to rise by 1.5% following a 1% drop in the previous month. Finally the Federal Open Market Committee will release today the minutes of the latest policy meeting on March 13, when policy makers noted further improvement in the labor market, household spending and business investment and pledged to maintain ultra easy monetary policy through late 2014. In the morning the dollar dropped to a 3-week low versus the yen – 81.55, and touched a 2-week low versus the loonie - 0.9886. The British pound remains close to a 4-month high of 1.6062. Euro The single currency has been maintaining a relatively tight range against the dollar in the previous two weeks. Yesterday the euro dropped from 1.3380 to 1.3277 as the euro-region unemployment rate increased to 10.8% in February, the highest in almost 14 years, while Italian unemployment rate touched the highest in more than a decade in February – 9.3%, compared with 9.1% in January. In Asian trading hours the euro pared previous losses and rose to 1.3350 by the beginning of the European trading session. Australian Dollar The aussie dropped in Asian trading hours against the greenback from 1.0465 to 1.0389 after the Reserve Bank of Australia kept the benchmark interest rate unchanged at 4.25%, saying in a statement that “the pace of output growth to be somewhat lower than earlier estimated”. However a further step to ease monetary policy will depend on “the forthcoming key data on prices” which will help “to reassess the outlook for inflation” the central bank said. At the same time the Bureau of Statistics reported today that Australian retail sales advanced in February by 0.2% after a 0.3% gain in January.