Forex - Australia dollar gains after RBA remarks, yen up on data

Investing.com - The Australian dollar gained in Asia on Wednesday on central bank official remarks suggesting economic recovery tools are in place on exchange and interest rates while the yen was stronger on better than expected data.

AUD/USD traded at 0.7639, up 0.21%, while USD/JPY changed hands at 121.05, down 0.07%. EUR/USD held at 1.0708, up 0.11%.

In Australia, the March Westpac-MI Consumer Sentiment index fell 1.2% to 99.5, somewhat expected after the strong rise in February that took the index to the highest level in more than a year.

A weaker Australian dollar from a mid-2013 peak has helped the economy adjust to new sources of demand with growth expected to gradually pickup, a senior Reserve Bank official said earlier Wednesday.

Assistant Governor Christopher Kent told the National RSL Clubs Conference in Hobart that a record low cash rate of 2.25% and other measures should help rebalance economic growth away from the end of a mining boom.

"Very low level of interest rates is expected to sustain strong activity in the housing market and support household wealth" and provide support for household consumption," Kent said.

January housing finance data follows at 1130 (0030 GMT), where expectation is for a 2.0% month-on-month fall after a 2.7% rise the month before.

In Japan, January machinery orders and February CGPI data were released. Core machinery orders fell 1.7% month-on-month, compared to an expected drop of 4.1%. CPGI rose 0.5% year-on-year in February matching expectations.

Later, China reports January-February industrial output, investment and retail sales at 1330 local time (0530 GMT).

Investment growth is seen up 15% for February year-on-year, and industrial output rose 7.8% in the same month and period, while retail sales are expected to have gained 11.7%.

Overnight, the dollar remained broadly higher against a basket of other major currencies on Monday, trading at a 11-1/2 year peak as expectations for a near-term U.S. rate hike continued to lend broad support to the greenback.

The dollar remained broadly supported after the latest U.S. jobs report expectations for higher interest rates.

The Federal Reserve is expected to begin raising interest rates around the middle of this year and investors were looking ahead to next week’s policy statement to see if it would drop its reference to being patient before raising rates.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, inched up 0.01% to 98.62.

The euro came under pressure after the European Central Bank started asset purchases on Monday, pushing euro area bond yields to new lows.

Concerns over the situation in Greece also weighed, as the eurogroup of finance ministers were holding a second day of talks in Brussels to discuss a reform package put forward by Greece as part of its bailout review.

Last month Athens reached a temporary agreement with its lenders to extend its bailout by four months, but the reform package must be signed off by creditors before it can access further financial aid.

Germany’s finance minister Wolfgang Schaeuble warned Tuesday that Greece must stop wasting time and start developing its reform package.