Investing.com - The Aussie fell in Asia Friday after the Reserve Bank of Australia lowered its inflation views in its Statement of Monetary Policy.
AUD/USD traded at 0.7403, down 0.84%, while USD/JPY changed hands at 107.08, down 0.17%.
"The Reserve Bank of Australia’s new forecast that underlying inflation will remain below the 2-3% target range until the middle of 2018 supports our long-held view that interest rates will be cut again to 1.5% before long," Capital Economics said in a note to clients.
"After previously forecasting that underlying inflation would be 2.0% this year and around 2.5% next year, the RBA has concluded that it will stay at 1.5% in the second quarter and will stay below 2% all of next year. Part of the downward revision is due to the fact that underlying inflation fell much further than the RBA expected in the first quarter. But the Bank has also concluded that wage growth will remain lower for longer. The clear implication is that monetary policy will need to do more to boost underlying inflation. Tuesday’s 0.25% rate cut to 1.75% will probably be followed by another cut in August."
The AIG construction index in Australia rose to 50.8, reaching expansion territory in April from a previous level of 45.2.
HIA economist Diwa Hopkins said the results show that activity in Australia's residential construction sector is easing from the record levels of 2015.
"The latest cut to the official cash rate - and critically, its pass-on by the major lenders - will support healthy levels of new home building over the near to medium term. Nevertheless, the level of building is still likely to be shy of what occurred in 2015."
Markets in Japan re-open Friday as the Golden Week holiday ends with the focus on whether Japan policy-makers will intervene to slow the yen's rise.
The U.S. dollar index, which measures the U.S. dollar's value versus six currencies, was up 0.01% to 93.74.
Overnight, the dollar rose against a basket of currencies for a third day on Thursday as traders closed out profitable bets against the greenback before Friday's U.S. payrolls report which may confirm the view the Federal Reserve will not raise interest rates soon.
Economists polled by Reuters forecast U.S. employers likely added 202,000 workers in April following a 215,000 increase in March with the jobless rate holding at 5.0 percent.
Steady monthly job gains have yet to prompt a pickup in wage growth, which remains a worry for the Federal Reserve.
In the absence of higher wage growth, together with sluggish global demand, Fed policy-makers will likely refrain from raising policy rates at its June 14-15 policy meeting, which would renew bets the dollar would fall, analysts said.
The futures market implied traders see a 14% chance the Fed will hike rates in June , little changed from Wednesday, Reuters data showed.