Will 2019 see an interest rate cut? Employment data holds the key

RBA Rate Guidance Critical to AUDUSD Outlook

The Australian dollar tumbled on Wednesday after its central bank signaled a possible interest-rate cut in the latest indication a global economic slowdown is tilting policymakers toward looser monetary policy, while a gauge of world equity markets edged back from two-month highs.

The Australian dollar languished near a two-week low on Thursday on rising bets that interest rates would most likely come down this year amid heightened growth risks at home and overseas. "That's what's actually contributed to this dollar rally that we have seen recently".

Governor Philip Lowe struck a more cautious tone at the Reserve Bank's first board meeting of the year and slightly lowered key forecasts, saying "the main domestic uncertainty remains around the outlook for household spending and the effect of falling housing prices in some cities".

"It was certainly a very important statement from the Governor because he so clearly flagged a shift in the RBA bias", CMC markets chief market strategist Michael McCarthy told Xinhua.

The New Zealand dollar was down 0.3 percent at $0.6765, after easing 0.1 percent earlier following weaker-than-expected unemployment data on Thursday.

USA 10-year yields down 0.6 bps to 2.692%.

The yen was 0.15 percent higher versus the greenback at 109.78.

Other than that, as mentioned earlier, just keep an eye on risk sentiment as the fall in AUD/JPY today may be a bellwether for further direction in risk assets/equities in the session ahead since the currency pair in itself is typically a barometer for risk. Japanese demand for foreign bonds has been another reason for the strength in dollar/yen.

The official cash rate has been sitting at a record-low 1.5 per cent since August 2016.

The dollar index, tracking the unit against six major currencies, rose 0.2 percent, with the euro down 0.3 percent to $1.1378.

Elsewhere, sterling was marginally lower at $1.2927. He says they're now evenly balanced.

Australia's central bank stared down calls to shift to a neutral bias amid a slumping property market, leaving its interest rate at a record low while acknowledging that downside risks have increased at home and overseas.

The Canadian dollar weakened by 0.18 percent versus the greenback to C$1.3238. Last week, the U.S. Federal Reserve said it would be patient with regard to further rate hikes, while the European Central Bank also sounded less certain that it will start tightening policy later this year.

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