Forex – Aussie Weaker After Housing Data, RBA Cash Rate Review Ahead
Investing.com – The Aussie dropped in Asia on Tuesday ahead of a central bank review of the cash rate as disappointing housing data weighed.
AUD/USD traded down 0.22% to 0.7810, while USD/JPY changed hands at 112.97, up 0.19%.
Australia reported that building approvals rose 0.4% on month in August, below the 1.1% gain expected, while private house approvals fell 0.6%, compared to a 1.0% gain in July.
Ahead, the Reserve Bank of Australia unveils its latest interest rate decision with expectations of a continued 1.50% record low cash rate. In Asia, markets in China remain shut for the week-long fall holiday with South Korea also on holiday.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, inched up 0.02% to 93.50.
Overnight, the dollar rose against a basket of major currencies after data showing manufacturing activity rose to its highest since 2004 fuelled expectations of solid third-quarter economic growth.
The Institute for Supply Management (ISM) said its index of national factory activity surged to a reading of 60.8 last month, the highest reading since May 2004, from 58.8 in August.
That beat economists’ expectations of a reading of 58.
The rally in dollar comes amid growing investor expectations the greenback faces a period of consolidation in the wake of data last week showing speculators increased their short bets against the U.S. dollar.
The value of the dollar’s net short position was $17.36 billion in the week to Sept 29, up from net shorts of $13.19 billion the previous week.
The pound and euro, meanwhile, added to losses against the greenback with the latter under pressure following renewed Eurozone geopolitical risk and downbeat manufacturing activity.
Preliminary results released by Spain’s Catalonia region government showed 90% of the 2.26 million Catalans who voted on Sunday voted in favour of independence, adding to Eurozone geopolitical uncertainty in the wake of the German election results a week ago.