Dollar lifts as greenback softens

The local unit was higher in late trade, as investors squared positions ahead of tomorrow’s inflation print.

The Australian dollar was higher in late trade on Tuesday, as investors squared short positions ahead of second quarter inflation data Wednesday.

At 5.40pm (AEST), the Australian dollar was trading at US75.15 cents, compared with US47.70c late on Monday.

Rodrigo Catril, currency strategist at National Australia Bank said the Australian dollar pushed higher, but the gains were not in response to news, but to more investors shifting to the sidelines.

Expectations are high that the consumer price index will clear a path to lower interest rates when the Reserve Bank of Australia holds its next policy meeting August 2.

IG market analyst Angus Nicholson said the currency’s session has been greatly shaped by the US dollar’s falls against the Japanese Yen on signs the Bank of Japan’s economic stimulus won’t be as big as expected.

“Leaked overnight were signs that Japan’s stimulus will be smaller than what markets had expected and this drove the Yen higher against the US dollar,” Mr Nicholson said.

“As a result, the US dollar has weakened against a range of other currencies.” Japan’s central bank is expected to announce further stimulus on Friday, while the US central bank is expected to hold off on lifting interest rates at its two-day monetary policy meeting that ends on Wednesday night, Australian time.

- Dow Jones newswires, AAP