Aussie dollar firm in afternoon

The local unit was slightly stronger in midafternoon trade, as currency markets eyed Trump’s travel ban.

Donald Trump’s travel ban has stoked unease among market players already feeling nervous about the rising threat of trade tensions. Picture: istock

The Australian dollar was slightly higher in midafternoon trade on Tuesday, as concerns linked to White House policy changes continued to weigh on the US dollar.

At 3.55pm (AEDT), the Australian dollar was at US75.66 cents, compared with US75.52c late on Monday.

US President Donald Trump announced policy changes to tighten immigration rules, prompting local protests and condemnation by some world leaders.

On Friday, Mr Trump signed an executive order temporarily barring some immigrants and refugees from entering the US. The move stoked unease among market players already feeling nervous about the rising threat of trade tensions.

“Participants will want to see how much the market reacts to Trump’s protectionist policies, and if the tax cut plans are indeed delayed, which would generate a lower US dollar,” said Richard Grace, global head of currency strategy at the Commonwealth Bank of Australia.

Local data of the day was more upbeat. Australian business conditions are enjoying a rebound, which could signal a stronger outlook for the country’s economy, according to a monthly survey by National Australia Bank.

Its business conditions index surged to +11 in December from +6 in November and well above the long-run average for the series of +5.

“The rebound in business conditions is certainly encouraging,” said NAB chief economist Alan Oster.

Still, “at this stage we are not getting too carried away with the result,” he added.

Mr Oster cautioned that unexpectedly strong improvements in some industries, such as wholesale, transport and utilities, might not be sustainable.

Dow Jones newswires