Dollar loses some shine, Aussie up ahead of rate call

By Anirban Nag

SYDNEY (BestGrowthStock) – The U.S. dollar steadied on Tuesday, after falling away from six-month highs on a basket of currencies, while the Australian dollar retained broad gains ahead of a widely expected interest rate hike later in the day.

The yen was broadly lower as risk appetite improved just a little after strong U.S. manufacturing data [ID:nN01363414] helped stocks regain some ground (.N: ).

The optimism generated by the ISM’s index of factory output followed strong manufacturing data from China, Australia and the euro zone, and lent support to flagging demand for assets leveraged to global growth like stocks and commodities.

The dollar index (Read more about the global trade. ) (.DXY: ), a measure of the greenback’s performance against six major currencies, was down 0.35 percent at 79.182, off a high of 79.534, its strongest since late July.

Still, the dollar retained gains on the yen at 90.80 yen, with near-term resistance seen around 90.95 yen which was its recent high.

The euro also bounced on the yen, climbing to 126.35 yen, from 126.23 yen late in New York on Monday, when it jumped 0.85 percent.

The euro traded up at $1.3934, although it remained on shaky ground as investors fretted about whether euzo zone monetary authorities will bail out Greece.

The Aussie dollar edged up to $0.8920, extending gains made on Monday, ahead of a central bank rate decision at 0330 GMT.

All 20 economists polled by Reuters expect a 25 basis point hike in the cash rate to 4 percent, with the market pricing in a nearly a 80 percent chance of such a move.

If the Reserve Bank of Australia (RBA) raises rates on Tuesday, it will be fourth straight hike, and comes on the back of robust data both at home and in China, the country’s biggest trading partner.

Also important will be the accompanying statement and any hint of a pause could see the Aussie give up some of those gains.

“Despite the unanimity on the call, we anticipate a balanced to dovish statement, highlighting that policy is already much less accommodative,” said David Watt, senior currency strategist at RBC Capital.

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(Editing by Wayne Cole)

Dollar loses some shine, Aussie up ahead of rate call