Forex - Aussie gains after central bank chief seeks demand spurs

Investing.com - The Australian dollar gained in Asia on Friday after central bank Governor Glenn Stevens noted spurring demand in the economy would take more work, indirectly suggesting the government step-up spending.

AUD/USD traded at 0.7758, up 0.28%, while USD/JPY changed hands at 118.90, down 0.18%. EUR/USD held at 1.1403, flat.

Monetary policy can still help rebalance the economy even it can't spur demand growth as it has in the past, Reserve Bank of Australia Governor Glenn Stevens said Friday.

The bank is "very conscious of the possibility that monetary policy's power to summon up additional growth in demand could, at these levels of interest rates, be less than it was in the past," Stevens said in an opening statement to the House of Representatives Standing Committee on Economics.

"A decade ago, when there was, it seems, an underlying latent desire among households to borrow and spend, it was perhaps easier for a reduction in interest rates to spark additional demand in the economy. Today, such a channel may be less effective," Stevens said.

Overnight, the dollar remained lower against the other major currencies on Thursday, as weak U.S. retail sales and jobless claims data continued to weigh, although ongoing concerns over the Greek debt crisis still lent some support to the safe-haven greenback.

In a report, the U.S. Commerce Department said that retail sales declined by 0.8% last month, worse than expectations for a drop of 0.5%. Retail sales fell by 0.9% in December.

Core retail sales, which exclude automobile sales, slumped 0.9% in December, disappointing forecasts for a 0.4% decline. Core sales in November dropped 0.9%, upwardly revised from a previously reported fall of 1.0%.

Separately, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending February 7 increased by 25,000 to 304,000 from the previous week’s revised total of 279,000.

Analysts had expected initial jobless claims to rise by 6,000 to 285,000 last week.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.03% to 94.32.

Greece’s current bailout is due to expire on February 28 and the new Greek government does not want it extended, fuelling fears over a conflict with its creditors which could trigger the country’s exit from the euro zone.