Forex – Australian dollar steady ahead of latest RBA rate review

Investing.com – The Australian dollar held steady in early Asia Tuesday ahead of a central bank monthly rate review.

AUD/USD traded at 0.8494, flat, while USD/JPY changed hands at 118.33, down 0.05%.

The Reserve Bank of Australia announces its latest stand on the official cash rate target at 1430 Sydney time with most analysts expecting it to hold steady at a record low 2.5%.

Earlier in the day, the third quarter current account balance and October building approvals are due at 1130 (0030 GMT). The current account is expected to show a deficit of A$13.5 billion

The forecast for building approvals is for a 5.2% month-on-month rise, rebounding somewhat from a 11% fall in September.

Overnight, a mixed bag of U.S. factory barometers weakened the dollar against most major currencies on Monday by prompting investors to rethink when the Federal Reserve will hike interest rates next year.

The U.S. currency has seen hefty demand in recent sessions as markets prepare for U.S. monetary to tighten while Europe and Japan move in the opposite direction.

The Markit U.S. manufacturing purchasing managers’ index ticked down to 54.8 in November from 55.9 in October. Economists had forecast a decline to 55.0.

Meanwhile in the U.S., the Institute of Supply Management reported earlier that its manufacturing PMI dipped to 58.7 from 59.0 in October, though still better than expectations of 57.9, though the dollar cooled its rally after posting strong gains on expectations for diverging global monetary policies.

The Federal Reserve has been taking steps to make U.S. monetary policy less accommodative while Europe and Japan have moved in the opposite direction.

Meanwhile in Europe, Markit Economics reported that factory activity in the euro zone slowed to a near standstill last month.

The euro zone’s manufacturing PMI slowed to 50.1 from a preliminary reading of 50.4 last month, just barely above the 50 level separating growth from contraction.

Germany’s manufacturing PMI entered contraction The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.46% at 88.000.

The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.04% at 88.06.