The Australian dollar is slightly higher in quiet trade as investors wait for events later in the week before making any significant moves.
At 0700 AEDT on Tuesday, the local unit was at 89.44 US cents, up from 89.35 cents on Monday.
BK Asset Management MD Kathy Lien says she expects the major currencies to break out of the current trading ranges later in the week.
“There has been very little activity in the foreign exchange market but that does not mean it will be a quiet consolidative week for currencies,” she said from New York.
Lien said the most significant event for markets this week would be early on Wednesday morning, Australian time, when the new head of the US Federal Reserve, Janet Yellen, appears before a congressional committee.
Dr Yellen is expected to be asked about the timing the scaling back of the Fed’s massive economic stimulus program.
Later on Wednesday, China will release international trade data for January which, Lien said, is expected to show a slowdown in export growth.
“If exports decline and the trade surplus contracts, concerns about slower Chinese growth could drag equities and currencies lower,” Lien said.
“The Australian and New Zealand dollars should suffer the most as investors wonder whether it was wise for the Reserve Bank of Australia to drop its easing bias.”
AAP
