Forex - Aussie holds gains despite weaker China HSBC PMI

Investing.com - The Australian dollar held gains on Tuesday in the aftermath of a siege in the financial district of Sydney and a slip in the HSBC manufacturing gauge for China.

AUD/USD traded at 0.8223, up 0.13%, after HSBC said its flash PMI for December showed a reading of 49.9, down from a final of 50 in November.

Earlier, the RBA said in its minutes of the December board meeting that rates would stay stable for a period, highlighting a mixed view on the economy.

USD/JPY traded at 117.38, down 0.37% and EUR/USD at 1.2458, up 0.17%.

Overnight, the dollar traded largely stronger against most major currencies on Monday after a key U.S. industrial production gauge beat market forecasts.

Expectations for the Federal Reserve's Wednesday statement on monetary policy to shed a positive light on the U.S. economy gave the greenback added support.

The Federal Reserve reported earlier that industrial production rose by 1.3% in November, beating expectations for a gain of 0.7%.

Industrial production for October was revised up to 0.1% from a previously reported decline of 0.1%.

The report added that the capacity utilization rate, a measure of how full firms are using their resources, rose to 80.1% last month from an upwardly revised 79.3% in October, beating market calls for an unchanged reading.

The data boosted demand for the dollar on expectations that the Federal Reserve will tighten monetary policy next year.

The Federal Reserve is due to release its latest statement on interest rates and monetary policy on Wednesday, and expectations the statement will contain language describing a more robust U.S. economy firmed the dollar, which shrugged off a soft regional factory gauge.

The New York Federal Reserve’s index of manufacturing conditions fell unexpectedly in December, dropping into negative territory for the first time in almost two years.

The Federal Reserve Bank of New York reported that its index of general business conditions came in at -3.6 this month, down from 10.16 in November. Analysts had expected the index to rise to 12.52.

On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.

The Empire State manufacturing index is seen as an early forecast of the Institute for Supply Managements factory survey.

The euro, meanwhile, continued to soften due to the Greek government's recent decision to bring forward a parliamentary vote for president to this week

The move stoked fears that the anti-bailout Syriza party could take power as a result.

Government leaders have expressed fears that Greece could be forced to exit the euro zone if parliament failed to elect a new head of state by Dec. 29.

The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.19% at 88.55.

On Tuesday, the U.S. is to publish reports on building permits and housing starts.