Dollar holds firm on upbeat U.S. data, RBA rate rise lifts Aussie



By Joice Alves and Kevin Buckland

LONDON/TOKYO, Dec 6 (Reuters) - The U.S. dollar index held firm on Tuesday, following its biggest rally in two weeks after strong services data in the United States fuelled expectations for higher interest rates from the Federal Reserve than recently projected.

The Australian dollar AUD=D3 perked up from near one-week lows after the Reserve Bank of Australia (RBA) raised rates for the eighth time in as many months.

The U.S. dollar index =USD , which measures the currency against six major peers, was at 105.24, steady after Monday's 0.7% rally, its biggest since Nov. 21.

It had dipped to 104.1 on Monday for the first time since June 28. It later reversed course after data showing U.S. services industry activity unexpectedly picked up in November, with employment rebounding.

"The longer the U.S. economy is robust the more doubts are probably going to increase as to whether the U.S. will actually face a recession next year and whether the U.S. central bank will actually cut its key rate at that stage," said You-Na Park-Heger, FX Analyst at Commerzbank.

The Federal Open Market Committee decides policy on Dec. 15. Traders currently expect a half-point hike to a 4.25-4.5% policy band and a terminal rate of just above 5% in May. FEDWATCH

German industrial orders recovered more than expected in October, but that failed to strengthening the euro EUR=EBS , flat on the day at $1.0500 after on Monday touching its highest level since late June.

The Western price cap on Russian seaborne crude, which came into force on Monday, may start to show its impact on the energy market soon, said Francesco Pesole, FX strategist at ING.

"When adding an expected drop in temperatures in Europe from this week, the risks of a new rally in energy prices are non-negligible, and the euro is highly exposed to such risks," he said.

The Aussie dollar AUD=D3 rose 0.3% to $0.6718, clawing back some of a 1.4% tumble on Monday as the RBA said it was not on a preset course to tighten policy but that inflation was still high.

"Whilst the RBA have spoken of a pause publicly, we may not be as close to one as I originally thought," said Matt Simpson, a senior analyst at brokerage City Index in Brisbane.

In volatile Monday trading, the Aussie reached a 2-1/2-month peak of $0.6851.



World FX rates Link



Reporting by Joice Alves and Kevin Buckland; Editing by
Alexander Smith

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.