Dollar higher ahead of RBA mintues

The Australian dollar is higher, ahead of what is expected to be an upbeat assessment of the economy from the central bank.

At 0700 AEDT on Tuesday, the local unit was trading at 103.98 US cents, up from 103.60 cents on Monday.

On Tuesday morning, the Reserve Bank of Australia (RBA) is due to release minutes of the its March 5 board meeting at which it kept the cash rate unchanged at three per cent.

RBA governor Glenn Stevens at the time said investment in the resources sector was increasing and housing investment was also gaining ground.

Kathy Lien, MD of BK Asset Management, said traders were buying up the Australian dollar ahead of anticipated more optimistic commentary from the RBA.

“What people will be looking for is the same sort of glass half-full sentiment in the RBA minutes,” she said from New York.

“That’s providing some underlying support for the Aussie and it’s helping it hold on to its highs today.

“After last week’s hot employment numbers that’s creating a renewed demand for the Aussie because, from an economic perspective as well as a banking sector perspective, Australia is certainly looking a lot more attractive than Europe.”

Official jobs figures, released last week, showed a 71,500 increase in total employment in the February.

In overnight trade, worries over a proposed bank deposit tax in Cyprus pushed sharemarkets lower and the euro down to 128.82 US cents, a fresh three-month low against the US dollar.

The Cyprus government plans to introduce a 6.75 per cent to 9.9 per cent tax on all bank deposits in the country in a move to obtain a 10 billion euros ($A12.6 billion) bailout.

Lien said she expected the Australian dollar to trade between 103.60 and 104.50 US cents on Tuesday. AAP

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