AUD/USD gains after Australian leading index data and RBA minutes, Fed speculation pressures the greenback

Australian dollar rose to daily highs against its US counterpart on Tuesday, as the Conference Board said its leading index for Australia climbed in September, while the greenback remained under pressure amid expectations that Feds loose monetary policy will be in place for longer.

AUD/USD reached a session high at 0.9402 at 7:15 GMT, after which consolidation followed at 0.9399, gaining 0.25% for the day. Support was likely to be received at November 15th low, 0.9306, while resistance was to be seen at November 18th high, 0.9419.

The minutes of Reserve Bank of Australias (RBA) most recent meeting on policy showed that the central bank will not close the possibility of additional interest rate cuts in order to support nations economic growth. According to the minutes, in 2014 growth may face restraints due to decreasing investment activity in Australian mining sector, low government spending and “uncomfortably high” exchange rate of the Aussie.

RBA said that it would be prudent to leave borrowing costs without change, but “not to close off the possibility of reducing it further should that be appropriate to support sustainable growth in economic activity, consistent with the inflation target.” At its meeting on November 5th the central bank left its benchmark rate unchanged at the record low level of 2.50%, while also revising down its growth prediction for 2014 earlier in the month.

On the other hand, the Conference Board research group reported that its leading index for Australia, which is crucial for short-term to intermediate-term growth forecasts, gained 0.3% in September, after a month ago it slipped 0.2%.

The yield on Australian benchmark three-year bonds was little changed at 3.06% today, as it has fallen 11 basis points since November 12th, Bloomberg imparted.

The MSCI Asia Pacific index of stocks demonstrated a slight change, after rising 3.2% during the past three days.

Meanwhile, the US currency remained pressured after Federal Reserve Chair-nominee Janet Yellen said in front of the Senate Banking Committee on Thursday last week that as US economy was beginning to show progress, rates of inflation and unemployment still have more room to approach central bank’s targets. Markets considered such comments as rather dovish, as it seemed Fed policymakers wanted further solid proof of economic improvement before making a move towards reduction of monthly asset purchases.

Federal Reserve Bank of New York President William Dudley said on Monday that he had more hope that US economy was improving, and also added, that the fiscal difficulties, which caused a drag on economic growth were likely to wear down during the coming months.

Investors focus was now set upon the release of the minutes of Feds monetary policy meeting, held on October 30th-31st, as it may provide clues over the future course of banks stimulus program.

Elsewhere, the Aussie was advancing against the euro, as EUR/AUD cross dropped 0.47% on a daily basis to trade at 1.4338 at 8:16 GMT. AUD/NZD pair, after having fallen to its lowest point since October 2008 at 1.1198 on Monday, was gaining 0.33% to trade at 1.1292 at 8:17 GMT.

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