Investing.com – AUS/USD fell during Asian trading hours on Thursday after IMF comments that Australia needs weaker AUD to achieve balanced growth.
"With growth currently on the soft side, the real exchange rate still strong and efforts to reduce the budget deficit likely, monetary policy should remain accommodative and act as the primary macroeconomic tool for managing aggregate demand in the near term," said the IMF.
The comments were made by the IMF Executive Board in its Article IV statement which were drafted on Feb. 10 and based on staff reports that were completed on January 24 but discussions were completed on Nov. 20, 2013.
IMF noted the staff assessment that the "exchange rate currently appears to be modestly overvalued in real effective terms," but this could weaken as major advanced economies tighten monetary policy. It said that a weaker Australian dollar is a "key factor for achieving broader-based growth in the economy.”
At 1130 Sydney (0030 GMT) Australian Bureau of Statistics will release the latest employment change figure and markets are expecting a rise of 15,000. In the previous month it fell by 22,600.
In New Zealand, the Business NZ Purchasing Manager’ Index fell to 56.2 in January from 56.4 in December. A reading of above 50 indicates expansion. For the 16th consecutive month the manufacturing activity expanded in the country.
AUD/USD fell 0.05% at 0.9022, NZD/USD rose 0.03% at 0.8321 while USD/JPY fell 0.04% at 102.48.
On Wednesday, the greenback traded mixed against most major currencies, buoyed by dovish ECB comments that softened the euro though weakened by a bullish take on the U.K. economy by the Bank of England.
The single currency slumped after ECB Executive Board member Benoit Coeure told Reuters that the bank is considering a negative deposit rate very seriously, which fueled safe-haven demand for the greenback.
Coeure said the ECB does not see deflation in the euro area though the bank does see low inflation, which should increase slowly back to its 2% target.
The ECB voted to leave interest rates across the euro zone unchanged at their record low of 0.25% last week. However, ECB head Mario Draghi indicated that the bank could cut rates in March to safeguard the region''s fragile recovery.
Elsewhere, Eurostat, the European Union''s statistical office, reported that industrial output for the euro area contracted 0.7% in December from November, worse than consensus forecasts for a 0.3% contraction, which further softened the single currency.
On year, the euro area''s December industrial production rate expanded 0.5%, far short of market calls for a 1.8% reading.
The dollar weakened against the pound after the Bank of England upgraded its forward guidance on rates and revised up its forecast for 2014 economic growth to 3.4% from a 2.8% forecast issued in November.
Speaking after the bank published its latest quarterly inflation report, BoE Governor Mark Carney said the U.K. unemployment rate has fallen much faster than anticipated and will hit a 7% threshold "in the spring."
In the six months since forward guidance was implemented the U.K. unemployment rate has fallen to 7.1% from 7.8%.
The bank outlined new forward guidance, saying that it will not raise rates until spare capacity in the U.K. economy has been fully absorbed, which it does not see happening until 2015.
The bank said it would consider a broader range of indicators, including the unemployment rate, wages and productivity and business surveys when deciding to raise rates, and added that when rates rise they will do so only gradually.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.02% at 80.77.
On Thursday, Federal Reserve Chair Janet Yellen is to testify on the bank’s semiannual monetary policy report before the House Financial Services Committee, in Washington.