Author: Reuters

By Erwin Seba

HOUSTON (Reuters) -Oil prices rose on Tuesday in anticipation of tighter supply later in February while markets watched U.S. diplomatic efforts to end the Gaza War and quell tensions in a major crude-producing region.

Brent crude futures gained 87 cents, or 1.12%, to $78.86 a barrel by 10:49 a.m. CST while U.S. West Texas Intermediate crude futures rose 88 cents, or 1.21%, to $73.68. Both contracts gained nearly 1% on Monday, rising for the first time in four sessions.

Inventory data due to be released later on Tuesday and on Wednesday are expected to show continued strong inventories for gasoline and diesel, said Phil Flynn, analyst at Price Futures Group. But going forward, those inventories are expected to tighten, he said.

Refiners are performing overhauls on plants across the country and an outage last week of the BP refinery in Whiting, Indiana, will limit production.

Efforts by U.S. Secretary of State Antony Blinken to halt the Gaza war were also on traders’ minds.

“The signs of de-escalation in the Middle-Eastern crisis are missing and continue to extend some support to ailing oil prices,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Blinken on Tuesday landed in Cairo for a meeting with Egyptian President Abdel Fatah al-Sisi. Palestinians hope the visit will bring a truce before a threatened Israeli assault on Rafah, a border city where about half the Gaza Strip population is sheltering.

At the same time, the United States continued its campaign against Iran-backed Houthis in Yemen, whose attacks on shipping vessels have disrupted global oil trading routes.

The U.S. strikes “do not point to an easing of tensions”, Commerzbank analysts Thu Lan Nguyen and Carsten Fritsch said in a note.

Yet souring demand expectations limited oil’s gains.

Analysts said expectations of higher-for-longer interest rates in the U.S. and elsewhere, plus China’s shaky economy, could cap consumption.

CMC Markets analyst Leon Li also said it would be difficult to return to previous highs, given the run of strong economic indicators from the U.S. was likely to lose steam.

“Layoffs are still increasing. This means that in the long term the (oil) demand will decline,” Li said.

On the supply side, market participants are awaiting U.S. crude stockpiles data due later on Tuesday. Five analysts polled by Reuters estimated on average that crude inventories rose by about 2.1 million barrels in the week to Feb. 2.

(Reporting by Paul Carsten in London and Stephanie Kelly and Trixie YapEditing by Louise Heavens, Jason Neely, David Goodman and David Ljunggren)

By Herbert Lash and Stefano Rebaudo

NEW YORK (Reuters) -The dollar edged lower against major currencies on Tuesday, but remained close to its highest level in almost three months, as strong economic data and a hawkish stance on interest rates by Federal Reserve officials buoys the U.S. currency.

A string of robust U.S. economic data, including a blowout unemployment report on Friday, and recent remarks from Fed Chair Jerome Powell have quashed speculation about early and steep rate cuts that the market had anticipated.

Traders are currently pricing in only a 16.5% chance of a cut in March, the CME Group’s FedWatch Tool shows, compared with a 68.1% chance at the start of the year.

They are also now pricing in around 117 basis points (bps) of cuts by the end of 2024, compared with around 150 bps anticipated in early January.

The dollar index, which measures the U.S. currency against six others, fell 0.06% to 104.39, having touched 104.60 on Monday, its highest since Nov. 14.

The dominant storyline for FX traders is a return to the U.S. economic exceptionalism trade that was seen in last year’s third quarter, said Matthew Weller, global head of research at FOREX.com.

“Now traders are wondering if instead of whether we’ll get a soft landing or recession, whether we could have no landing or re-acceleration this year,” he said. “To me it is a lot about the U.S. dollar, the Fed and the economic data that we’re seeing out of the U.S.”

Key to that view is the outlook for interest rates and how high they stay, as higher yields help bolster a currency.

“The real debate is not if the Fed cuts a few weeks sooner or later, but if it cuts by less or more than the rest of the world over the next two years,” said George Saravelos, global head of forex research at Deutsche Bank.

“We continue to see the risks skewed towards less Fed easing and therefore in favor of the U.S. dollar,” he added.

The euro was flat at $1.0742%.

German industrial orders unexpectedly jumped in December, while euro zone consumers have trimmed their expectations for inflation over the next 12 months.

“A potential repricing of the ECB (European Central Bank) policy path towards a first rate cut in June instead of April, which we regard as likely, would prop up the euro in the medium term,” said Roberto Mialich, forex strategist at UniCredit.

The Reserve Bank of Australia (RBA) earlier on Tuesday left rates unchanged, but cautioned about a possible further monetary tightening.

The Aussie rose 0.31% to $0.6503, inching away from the 2-1/2 month low of $0.6469 it touched on Monday.

The repricing of the RBA monetary path “helps to provide modest support for the Australian dollar in the near-term,” said Lee Hardman, senior currency analyst, at MUFG.

“Sentiment towards the Aussie has also been boosted indirectly overnight by the rebound in the Chinese equity market where speculation is building over further state policy action to provide stability,” he added.

Sterling last fetched $1.2582, up around 0.37% on the day, but remained close to Monday’s seven-week low.

The pound’s fall on Monday came despite some upbeat economic data. Figures showed that UK unemployment was likely much lower late last year than previously thought, which could push out British rate cuts too.

The Japanese yen was stronger on the day at 148.250 per dollar, but not far off a two-month low of 148.90.

Japan’s real wages fell for a 21st straight month, though at a slower pace, while household spending dropped for a 10th consecutive month, showing inflation outpaced wage recovery and continued to weigh on consumer spending.

(Reporting by Herbert Lash, additional reporting by Stefano Rebaudo and Ankur Banerjee in Singapore; Editing by Jamie Freed and Mark Potter)

By Paul Carsten

LONDON (Reuters) -Oil prices maintained upward momentum on Tuesday as investors awaited the result of top U.S. diplomat Antony Blinken’s efforts in the Middle East to halt the Gaza war and quell tensions in a major oil-producing region.

Brent crude futures gained 42 cents to $78.41 a barrel by 1421 GMT while U.S. West Texas Intermediate crude futures rose 46 cents to $73.24. Both contracts gained nearly 1% on Monday, rising for the first time in four sessions.

“The signs of de-escalation in the Middle-Eastern crisis are missing and continue to extend some support to ailing oil prices,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Blinken met Saudi Arabia’s de-facto ruler on Monday and on Tuesday landed in Cairo for a meeting with Egyptian President Abdel Fatah al-Sisi. Palestinians hope the visit will bring a truce before a threatened Israeli assault on Rafah, a border city where about half the Gaza Strip population is sheltering.

The ceasefire offer, delivered to Hamas last week by Qatari and Egyptian mediators, has yet to draw a response from militants who say they want more guarantees it will end the four-month-old war.

At the same time, the United States continued its campaign against Iran-backed Houthis in Yemen, whose attacks on shipping vessels have disrupted global oil trading routes.

The group has described its recent attacks as acts of solidarity with Palestinians and on Tuesday said that it will escalate further if the Israeli attacks on Gaza do not stop.

The U.S. strikes “do not point to an easing of tensions”, Commerzbank analysts Thu Lan Nguyen and Carsten Fritsch said in a note.

Yet souring demand expectations limited oil’s gains.

Analysts said expectations of higher-for-longer interest rates in the U.S. and elsewhere, plus China’s shaky economy, could cap consumption.

CMC Markets analyst Leon Li also said it would be “difficult to return to previous highs”, given that the run of strong economic indicators from the U.S. is likely to lose steam.

“Layoffs are still increasing. This means that in the long term the (oil) demand will decline,” Li said.

On the supply side, market participants are awaiting U.S. crude stockpiles data due later on Tuesday. Five analysts polled by Reuters estimated on average that crude inventories rose by about 2.1 million barrels in the week to Feb. 2.

(Reporting by Paul Carsten in London and Stephanie Kelly and Trixie YapEditing by Louise Heavens, Jason Neely and David Goodman)

By Paul Carsten

LONDON (Reuters) -Oil prices maintained upward momentum on Tuesday as investors awaited the result of top U.S. diplomat Antony Blinken’s efforts in the Middle East to halt the Gaza war and quell tensions in a major oil-producing region.

Brent crude futures gained 55 cents to $78.54 a barrel by 1224 GMT, while U.S. West Texas Intermediate crude futures rose 48 cents to $73.26. Both contracts gained nearly 1% on Monday, rising for the first time in four sessions.

“The signs of de-escalation in the Middle-Eastern crisis are missing and continue to extend some support to ailing oil prices,” said Phillip Nova senior market analyst Priyanka Sachdeva.

As part of his trip to the region, Blinken met Saudi Arabia’s de-facto ruler on Monday, and on Tuesday landed in Cairo for his meeting with Egyptian President Abdel Fatah al-Sisi. Palestinians hope the visit will clinch a truce before a threatened Israeli assault on Rafah, a border city where about half the Gaza Strip population is sheltering.

The ceasefire offer, delivered to Hamas last week by Qatari and Egyptian mediators, awaits a reply from militants who say they want more guarantees it will end the four-month-old war.

At the same time, the United States continued its campaign against Iran-backed Houthis in Yemen, whose attacks on shipping vessels have disrupted global oil trading routes. The group has described their recent attacks as acts of solidarity with Palestinians.

The U.S. strikes “do not point to an easing of tensions”, said Commerzbank analysts Thu Lan Nguyen and Carsten Fritsch in a note.

Yet souring demand expectations limited oil’s gains.

Analysts said expectations of “higher for longer” interest rates in the U.S. and elsewhere plus China’s shaky economy could cap consumption.

CMC Markets analyst Leon Li also said it would be “difficult to return to previous highs” given that the run of strong economic indicators from the U.S. would likely lose steam.

“Layoffs are still increasing. This means that in the long term, the (oil) demand will decline,” Li said.

On the supply side, market participants are awaiting industry data due later on Tuesday on U.S. crude stockpiles. Five analysts polled by Reuters estimated on average that crude inventories rose by about 2.1 million barrels in the week to Feb. 2.

(Reporting by Paul Carsten in London and Stephanie Kelly and Trixie Yap; editing by Louise Heavens and Jason Neely)

By Stefano Rebaudo and Ankur Banerjee

(Reuters) -The U.S. dollar was up slightly on Tuesday, close to its highest level in almost three months, while the Australian dollar ran out of steam after rising earlier in the session.

A string of robust U.S. economic data and remarks from Federal Reserve Chair Jerome Powell have quashed speculation of early and steep interest rate cuts and supported the greenback.

Traders are currently pricing in only a 16% chance of a cut in March, the CME FedWatch tool showed, compared with a 69% chance at the start of the year.

They are also now pricing in around 115 basis points (bps) of cuts this year, compared with around 150 bps anticipated in early January.

The dollar index, which measures the U.S. currency against six others, rose 0.1% to 104.58, having touched 104.60 on Monday, its highest since Nov. 14.

“There seems little incentive for investors and corporates to offload any of their dollar holdings,” said Chris Turner global head of markets at ING.

“There is also the looming China Lunar New Year holiday next week, which may make the market reluctant to carry short dollar positions in an uncertain geopolitical environment,” he added.

Some analysts still see a positive outlook for the greenback.

“The real debate is not if the Fed cuts a few weeks sooner or later, but if it cuts by less or more than the rest of the world over the next two years,” said George Saravelos, global head of forex research at Deutsche Bank.

“We continue to see the risks skewed towards less Fed easing and therefore in favour of the U.S. dollar,” he added.

The euro was down 0.1% at $1.0732%.

German industrial orders unexpectedly jumped in December, while euro zone consumers have trimmed their expectations for inflation over the next 12 months.

“German data are supporting the single currency,” said Roberto Mialich, forex strategist at UniCredit.

“A potential repricing of the ECB (European Central Bank) policy path towards a first rate cut in June instead of April, which we regard as likely, would prop up the euro in the medium term,” he added.

The Reserve Bank of Australia (RBA) on Tuesday left rates unchanged, but cautioned about a possible further monetary tightening.

The Aussie rose 0.05% to $0.6492, inching away from the 2-1/2 month low of $0.6469 it touched on Monday. The New Zealand dollar was 0.13% higher at $0.6063.

The repricing of the RBA monetary path “helps to provide modest support for the Australian dollar in the near-term,” said Lee Hardman, senior currency analyst, at MUFG.

“Sentiment towards the Aussie has also been boosted indirectly overnight by the rebound in the Chinese equity market where speculation is building over further state policy action to provide stability,” he added.

The Aussie dollar is usually strongly correlated to Chinese stocks, as China is Australia’s largest trading partner.

Chinese stocks recorded their biggest one-day gain since 2022 and the yuan rose on a slew of signals that authorities are strengthening their resolve to support slumping markets.

Sterling last fetched $1.2565, up around 0.15% on the day, but remained close to Monday’s seven-week low.

The pound’s fall on Monday came despite some upbeat economic data. Figures showed that UK unemployment was likely much lower late last year than previously thought, which could push out British rate cuts too.

The Japanese yen was stronger on the day at 148.71 per dollar, but not far off a two-month low of 148.90.

Japan’s real wages fell for a 21st straight month, though at a slower pace, while household spending dropped for a 10th consecutive month, showing inflation outpaced wage recovery and continued to weigh on consumer spending.

(Reporting by Stefano Rebaudo and Ankur Banerjee in Singapore; Editing by Jamie Freed and Mark Potter)

By Ankur Banerjee

SINGAPORE (Reuters) -The U.S. dollar wobbled near a three-month peak as expectations the Federal Reserve is unlikely to cut rates aggressively this year take hold, while the Australian dollar rose after the central bank said it could not rule out another rate hike.

The Reserve Bank of Australia (RBA) on Tuesday left rates unchanged at a 12-year high of 4.35%, as expected, after its February meeting, but cautioned that a further increase in interest rates might be needed to tame inflation.

Investors have steadily moved to push back bets for the first rate cut from the RBA to August, rather than June, with economists polled by Reuters also expecting the central bank to stay steady on rates well into the second half of this year.

The Aussie rose 0.44% to $0.65115 after the decision, inching away from the 2-1/2 month low of $0.6469 it touched on Monday. The New Zealand dollar was 0.23% higher at $0.6069.

“It totally makes sense for the RBA to retain hawkish bias, given the pushback to easing expectations we have seen lately from the Fed, ECB and other major central banks,” said Charu Chanana, head of currency strategy at Saxo in Singapore.

“Bearish AUD picture remains intact, given the lags in RBA pricing compared to that of the Fed, as well as the broader downbeat China picture.”

Meanwhile, the dollar index, which measures the U.S. currency against six rivals, eased a bit to 104.32, having touched 104.60 on Monday, its highest since Nov. 14. The index is up 3% for the year so far after dropping 2% in 2023.

Data on Monday showed U.S. services sector growth picked up in January as new orders increased and employment rebounded, indicating a strong start to the year for the economy. The data followed a blowout jobs report last week.

The string of robust U.S. economic data has quashed any lingering hopes of early and steep interest rate cuts by the Fed, with Fed Chair Jerome Powell and other policymakers also pushing back against the notion.

Traders have been scaling back rate cuts bets since the beginning of the year and are currently pricing in only a 16% chance of a cut in March, the CME FedWatch tool showed, compared with a 69% chance at the start of the year.

They are also now pricing in 115 basis points (bps) of cuts this year, compared with around 150 bps of easing anticipated in early January.

“There may still be a bit of room to scale back (more) but it’s likely limited given that the disinflation trend in the US is becoming more entrenched and that labour market tightness is gradually easing,” said Christopher Wong, a currency strategist at OCBC in Singapore.

In other currencies, the euro was little changed at $1.0750, while sterling last fetched $1.25495, up 0.11% on the day but remained close to the seven-week low it hit on Monday.

The pound’s fall on Monday came despite some upbeat economic data. Figures showed that the unemployment rate was likely much lower late last year than previously thought, which could push out British rate cuts too.

“The tighter than expected UK labour market supports our view that interest rate cuts are still some way off,” said Kristina Clifton, FX strategist and economist at Commonwealth Bank of Australia in a note.

“We expect the first cut in August versus current market pricing for the June cut.”

The Japanese yen was stronger on the day at 148.44 per dollar, but not far off a two-month low of 148.90 it touched on Monday.

Japan’s real wages fell for a 21st straight month though at a slower pace, while household spending dropped for a 10th consecutive month, showing inflation outpaced wage recovery and continued to weigh on consumer spending.

(Reporting by Ankur Banerjee in Singapore; Editing by Sonali Paul and Jamie Freed)

By Stephanie Kelly and Trixie Yap

(Reuters) -Oil prices inched up in early Tuesday trade as investors waited to see whether a Middle East trip by top U.S. diplomat Antony Blinken will bring a halt to the Gaza war, which has raised concerns about supplies from the major producing region.

Brent crude futures rose 20 cents to $78.19 a barrel at 0452 GMT, while U.S. West Texas Intermediate crude futures climbed 20 cents to $72.98. Both contracts gained nearly 1% on Monday, rising for the first time in four sessions.

“The signs of de-escalation in the Middle-Eastern crisis are missing and continue to extend some support to ailing oil prices,” said Phillip Nova senior market analyst Priyanka Sachdeva.

Blinken met Saudi Arabia’s de-facto ruler on Monday. Palestinians hope the visit will clinch a truce before a threatened Israeli assault on Rafah, a border city where about half the Gaza Strip population is sheltering.

The ceasefire offer, delivered to Hamas last week by Qatari and Egyptian mediators, awaits a reply from militants who say they want more guarantees it will bring an end to the four-month-old war.

The United States continued its campaign against Iran-backed Houthis in Yemen, whose attacks on shipping vessels have disrupted global oil trading routes.

Concerns about the demand outlook however limited price gains.

Analysts said expectations of “higher for longer” interest rates in the United States, and beyond, would likely cap consumption, as are indications that China’s economy continues to struggle with meaningful growth.

CMC Markets analyst Leon Li also said it would be “difficult to return to previous highs” given that the a run of strong economic indicators out of the United States would likely lose steam.

“Layoffs are still increasing. This means that in the long term, the (oil) demand will decline,” Li said.

On the supply side, market participants are awaiting industry data due later on Tuesday on U.S. crude stockpiles. Five analysts polled by Reuters estimated on average that crude inventories rose by about 2.1 million barrels in the week to Feb. 2.

BMI analysts said in a client report that they expect the market will remain broadly balanced over the course of the year and that oil prices would gain a moderate 3.4%.

“However, we see risks to the outlook both to the upside and the down, due to considerable uncertainties surrounding the strength of the global economy, the fallout from the unfolding Red Sea crisis and the evolution of OPEC+ policy, amongst other things,” they added.

(Reporting by Stephanie Kelly and Trixie Yap; Editing by Miral Fahmy)

By Ankur Banerjee

SINGAPORE (Reuters) -The U.S. dollar was steady near a three-month peak on Tuesday on rising expectations the Federal Reserve is unlikely to cut rates aggressively this year, while the Australian dollar gained after the central bank said it could not rule out another rate hike.

The Reserve Bank of Australia left rates unchanged at a 12-year high of 4.35%, as expected, after its February meeting, but cautioned that a further increase in interest rates might be needed to tame inflation.

Investors have steadily moved to push back bets for the first rate cut from the RBA to August, rather than June, with economists polled by Reuters also expecting the central bank to stay steady on rates well into the second half of this year.

The Aussie rose 0.35% to $0.6505 after the decision, having touched a two-and-a-half month low of $0.6469 on Monday. The New Zealand dollar was 0.19% higher at $0.60665.

“It totally makes sense for the RBA to retain hawkish bias, given the pushback to easing expectations we have seen lately from the Fed, ECB and other major central banks,” said Charu Chanana, head of currency strategy at Saxo in Singapore.

“Bearish AUD picture remains intact, given the lags in RBA pricing compared to that of the Fed, as well as the broader downbeat China picture.”

Meanwhile, the dollar index, which measures the U.S. currency against six rivals, was at 104.38, having touched 104.60 on Monday, its highest since Nov. 14. The index is up 3% for the year so far after dropping 2% in 2023.

Data on Monday showed U.S. services sector growth picked up in January as new orders increased and employment rebounded, indicating a strong start to the year for the economy and comes after a blowout jobs report last week.

The string of robust U.S. economic data has quashed any lingering hopes of early and steep interest rate cuts by the Fed, with Fed Chair Jerome Powell and other policymakers also pushing back against the notion.

Traders have been scaling back rate cuts bets since the beginning of the year and are currently pricing in only a 15% chance of a cut in March, the CME FedWatch tool showed, compared with a 69% chance at the start of the year.

They are also now pricing in 115 basis points (bps) of cuts this year, compared with around 150 bps of easing anticipated in early January.

“There may still be a bit of room to scale back (more) but it’s likely limited given that the disinflation trend in the US is becoming more entrenched and that labour market tightness is gradually easing,” said Christopher Wong, a currency strategist at OCBC in Singapore.

In other currencies, the euro was little changed at $1.0747, while sterling last fetched $1.2546, up 0.08% on the day but remained close to the seven-week low it hit on Monday.

The pound’s fall on Monday came despite some upbeat economic data. Figures showed that the unemployment rate was likely much lower late last year than previously thought, which could push out rate cuts there, too.

“The tighter than expected UK labour market supports our view that interest rate cuts are still some way off,” said Kristina Clifton, FX strategist and economist at Commonwealth Bank of Australia in a note.

“We expect the first cut in August versus current market pricing for the June cut.”

The Japanese yen was a tad stronger on the day at 148.61 per dollar, but not far off a two-month low of 148.90 it touched on Monday.

Japan’s real wages fell for a 21st straight month though at a slower pace, while household spending dropped for a tenth consecutive month, showing that inflation outpaced wage recovery and continued to weigh on consumer spending.

(Reporting by Ankur Banerjee in Singapore; Editing by Sonali Paul)

By Neil Jerome Morales and Mikhail Flores

MANILA (Reuters) – The Philippine central bank reinforced its hawkish stance on Tuesday despite slower annual inflation in January, as policymakers remain wary that the El Nino impact could lift consumer price growth above its target in the second quarter.

The consumer price index rose 2.8% in January, the least since October 2020, the Philippine Statistics Authority said, from a 3.9% gain in December. That was below the 3.1% forecast in a Reuters poll, and was the second consecutive month that the pace of price increases fell within the central bank’s 2% to 4% target range.

Core inflation, which strips out volatile food and energy costs, slowed to 3.8% in January from 4.4% in the previous month.

“The balance of risks to the inflation outlook still leans significantly towards the upside,” the Bangko Sentral ng Pilipinas (BSP) said in a statement, citing upside risks that could potentially stem from higher food prices due to El Niño, and an increase in the cost of transport, electricity and oil.

The central bank, which is set to meet on Feb. 15 to review interest rates, said it “deems it necessary to keep monetary policy settings sufficiently tight until a sustained downtrend in inflation becomes evident.”

The latest data showing easing price pressures should bode well for the consumption-driven economy which grew 5.6% in 2023, below the government’s 6.0% to 7.0% target for that year as soaring inflation undermined domestic demand.

The BSP has raised its benchmark interest rate by 450 basis points since May 2022 to rein in inflation, including an off-cycle hike in October last year. However, it kept the rate steady at 6.5% at its final two policy meetings of 2023.

Domini Velasquez, chief economist at China Banking Corp, said she does not expect the BSP to hike rates at its February meeting but underlined the need for non-monetary measures to tamp down on food prices, especially the cost of the national staple, rice.

Rice inflation, which accelerated to a 14-year high of 22.6% in January, “is becoming a concern,” Velasquez said.

(Reporting by Neil Jerome Morales and Mikhail Flores; Editing by Kanupriya Kapoor, Christopher Cushing & Shri Navaratnam)

By Ankur Banerjee

SINGAPORE (Reuters) – The U.S. dollar was perched near a three-month peak on Tuesday, buoyed by elevated Treasury yields, on growing expectations that the Federal Reserve is unlikely to cut interest rates aggressively this year.

The dollar index, which measures the U.S. currency against six rivals, was at 104.42, having touched 104.60 on Monday, its highest since Nov. 14. The index is up 3% for the year so far after dropping 2% in 2023.

Data on Monday showed U.S. services sector growth picked up in January as new orders increased and employment rebounded, indicating a strong start to the year for the economy and comes after a blowout jobs report last week.

The string of robust U.S. economic data has quashed any lingering hopes of early and steep interest rate cuts by the Fed, with Fed Chair Jerome Powell and other policymakers also pushing back against the notion.

Traders have been scaling back rate cuts bets since the beginning of the year and are currently pricing in only a 15% chance of a cut in March, the CME FedWatch tool showed, compared with a 69% chance at the start of the year.

They are also now pricing in 115 basis points (bps) of cuts this year, compared with around 150 bps of easing anticipated in early January.

“There may still be a bit of room to scale back (more) but it’s likely limited given that the disinflation trend in the US is becoming more entrenched and that labour market tightness is gradually easing,” said Christopher Wong, a currency strategist at OCBC in Singapore.

Investor focus in Asia will be on the policy decision from the Reserve Bank of Australia later in the day, with the central bank widely expected to stand pat on rates, leaving comments from Governor Michele Bullock in the spotlight.

Investors have moved to push back bets for the first rate cut from the RBA to August, rather than June, with economists polled by Reuters also expecting the central bank to stay steady on rates well into the second half of this year.

The Australian dollar was little changed at $0.64835 ahead of the decision, loitering around its lowest since Nov. 17.

In other currencies, the euro was up 0.02% at $1.0743, while sterling last fetched $1.254, up 0.06% on the day but remained close to the seven-week low it hit on Monday.

The pound’s fall on Monday came despite some upbeat economic data. Figures showed that the unemployment rate was likely much lower late last year than previously thought, which could push out rate cuts there, too.

“The tighter than expected UK labour market supports our view that interest rate cuts are still some way off,” said Kristina Clifton, FX strategist and economist at Commonwealth Bank of Australia in a note.

“We expect the first cut in August versus current market pricing for the June cut.”

The Japanese yen strengthened 0.07% to 148.56 per dollar, hovering around a two-month low of 148.90 it touched on Monday.

Japan’s real wages fell for a 21st straight month though at a slower pace, while household spending dropped for a tenth consecutive month, showing that inflation outpaced wage recovery and continued to weigh on consumer spending.

(Reporting by Ankur Banerjee in Singapore; Editing by Sonali Paul)