$A moves higher

The Australian dollar is higher after the currency recovered from Monday's fall, while taking a string of public comments from the Reserve Bank of Australia in its stride.

At 1700 AEDT, the currency was at 103.80 US cents, up from 103.60 US cents on Monday afternoon.

It reached a high of 104.07 US cents on Tuesday morning.

ANZ foreign exchange strategist Andrew Salter said the Australian dollar had regained ground lost on Monday on negative global sentiment surrounding news Cyprus would impose a 10 per cent levy on bank deposits as part of a bailout deal with the European Union.

Mr Salter said the rebound showed demand for the Australian dollar remained strong.

"That's testament to its status as a quasi safe haven currency as well as the strong underlying demand that has underpinned the currency for some time now," he said.

But Mr Salter said the Australian dollar had largely shrugged off a series of public statements by the RBA - through the release of the minutes from its March board meeting and speeches from deputy governor Dr Philip Lowe and assistant governor Dr Guy Debelle.

"Those events were all closely watched by the market but they didn't have a price impact," he said.

"I think a lot of what was said was consistent with the bank's previous statements on monetary policy."

In the minutes of its March board meeting the RBA said there were signs six interest rate cuts delivered between November 2011 and December 2012 were starting to affect weaker parts of the economy, but more rate cuts may be needed.

At 1700 AEDT, the currency was at 99.04 Japanese yen, up from 97.85 yen on Monday and at 80.21 euro cents, down from 80.34 euro cents.

Meanwhile, Nomura head of fixed income Jon Linton said Australian bond futures prices retreated on Tuesday, after rallying on Monday on news of the Cyprus levy.

"The market is now back to where it was pre-Cyprus, so the market has pretty much discounted all the European nervousness and said that doesn't matter," he said.

Mr Linton said part of the reason for the weakness in the bond market on Tuesday was a growing expectation the RBA would keep the cash rate on hold for 2013.

Traders had now priced in the chance of less than one interest rate cut this year down from about two rate cuts priced in earlier this year, he said.

"So the market is now effectively saying it doesn't think the RBA is going to cut, so that sentiment has overcome the negativity surrounding Europe and Cyprus."

The RBA kept the cash rate on hold at three per cent in February and March.

At 1630 AEDT on Tuesday, the June 10-year bond futures contract was trading at 96.430 (implying a yield of 3.570 per cent), down from 96.510 (3.490 per cent) on Monday.

The June three-year bond futures contract was at 96.970 (3.030 per cent), down from 97.060 (2.940 per cent).

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9327-0.0005-0.05%
    AUDUSD=X
    0.5555-0.0003-0.05%
    AUDGBP=X
    0.6753-0.0003-0.05%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg