FOREX-Dollar subdued in thin trade, Aussie eyes RBA

Mon May 5, 2014 7:23pm EDT

Related Topics

* G3 currencies flat after tightly range-bound session

* Aussie holds firm near 93c in lead up to RBA meeting

* Outcome of RBA policy review due 0430 GMT

By Ian Chua

SYDNEY, May 6 (Reuters) - The dollar was subdued in Asia on Tuesday, holding largely around where it began this week after an aimless session overnight with holidays in Japan and Britain crimping activity in markets.

The dollar index was steady at 79.501, having drifted in a very slim 79.433 and 79.527 range on Monday. This stood in sharp contrast to Friday's volatile session when the index jumped to 79.852 in reaction to upbeat payrolls data, only to then reverse all of that.

The euro stood at $1.3875, having moved in a tight $1.3864-$1.3887 range. Against the yen, the greenback was little changed at 102.15 as was the euro at 141.71.

Dollar sentiment got a fillip after the Institute for Supply Management said its services sector index rose to 55.2 in April, the fastest pace in eight months and handily beating forecasts. A reading above 50 indicates expansion.

The data added to recent signs that the U.S. economy is emerging from a harsh winter-induced slowdown and provided a welcome offset to worries about China.

Trading in Asia is likely to stay subdued with Japan still closed for a public holiday and given an absence of market-moving economic data.

That should leave the focus squarely on the outcome of Australia's central bank policy meeting at 0430 GMT.

The Reserve Bank of Australia (RBA) is considered almost certain to leave its cash rate unchanged at 2.5 percent and maintain a steady policy outlook.

Many, however, will be looking for any commentary on the level of the Australian dollar, which has remained stubbornly high.

The Aussie was last at $0.9276, holding above support at $0.9250, a level that has provided a floor for the currency since its gradual decline from a five-month peak of $0.9461 on April 10.

"The AUD has held firm heading into the RBA meeting today. We expect it to leave the cash rate unchanged and repeat its forward guidance for a period of stable rates," Barclays Capital analysts wrote in a note to clients. (Editing by Shri Navaratnam)

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