Investing.com - The Aussie held gains on upbeat data from China and ticked higher in Asia on Tuesday despite weak house data and a mixed consumer with investors poised for the start of a two-day Federal reserve review of interest rates.
AUD/USD traded at 0.7502, up 0.08%, with the economy's fortunes closely tied to trade with China, while USD/JPY changed hands at 115.10, up 0.07%.
China reported retail sales jumped 10.8%, better than the 10.1% rise seen year-on-year for November, along with industrial production that gained 6.2%, a tick better than the expected 6.1% increase and fixed asset investment came in as seen up 8.3%.
Earlier Australia reported the house price index rose 1.5% in the third quarter, below the 2.3% gain seen, the weakest growth since the first quarter of 2013 and was down from a peak rise of 10.7% a year ago. As well, NAB business confidence came in at plus-5 in November, up a tick from plus-4 the previous month and the NAB business survey dipped to plus-5 from plus-6.
NAB Chief Economist Alan Oster said if the weaker trend in the survey and other partials continued over coming months that would be a fairly definitive sign that the non-mining recovery has run out of steam. "For now though the weak Q3 GDP result is enough to warrant some downward revision to growth forecasts - even with some anticipated 'bounce-back' in coming quarters."
"Meanwhile, the rally in commodity prices is expected to be short-lived and is unlikely to translate into higher investment or wages at this point in the commodity cycle. Two more 25 bp rate cuts are still expected from
the RBA next year in response to ongoing low inflation and a more subdued growth outlook," he said.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.04% to 101.04.
Overnight, the dollar moved lower against the other major currencies on Monday, as investors turned their attention to the outcome of Wednesday’s Federal Reserve policy meeting amid widespread expectations for a rate hike.
The Fed is widely expected to hike rates for the first time in a year on Wednesday, with investors pricing in a 100% chance of an increase, according to federal funds futures tracked Investing.com's Fed Rate Monitor Tool.
The U.S. central bank will also announce updated economic forecasts and markets will be watching closely for signals on the outlook for inflation and the expected pace of rate hikes in 2017.
Higher rates boost the dollar by making the currency more attractive to yield-seeking investors.