The Australian is gradually regaining the losses made after the US unemployment rate hit a six year low of 5.9 per cent.
At 0700 AEDT on Tuesday, the local unit was trading at 87.57 US cents, up from 87.05 cents on Monday.
Early on Saturday morning, Australian time, it dropped to a four year low of 86.43 US cents, after the release of better than expected US employment data.
ThinkForex senior markets analyst, Matt Simpson, said the focus would now be on the outcome of the Reserve Bank of Australia’s board meeting on Tuesday afternoon.
While the RBA is expected to keep the cash rate unchanged for the foreseeable future, all eyes will be on whether governor Glenn Stevens makes any comment on the lower Australian dollar.
The currency has dropped as much as eight US cents since late July.
“Having previously removed ‘high by historical standards’ and replacing it with ‘remains above most estimates of its fundamental value’ we can already see a more relaxed RBA even before the currency’s drop,” Simpson said.
“If we see no reference at all to the exchange rate, then this would suggest current levels are what the RBA deem to be acceptable.”
Simpson said that if the RBA does not express a desire to keep the cash rate stable, then the Australian dollar is likely to rise further.
AAP
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