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Asian Session – Aussie fails to gain support from RBA minutes; pound falls ahead of CPI

The dollar edged higher in Asian trading, adding to Monday’s gains on the back of strong housing data. The National Association of Home Builders housing market index rose to the highest level in a decade in August. The US currency ignored weak manufacturing data from the New York Fed, which showed manufacturing activity falling to its lowest level since 2009.

The dollar climbed to 124.50 against the Japanese yen before sliding to 124.35 in late Asian session. The euro drifted lower and was last trading at 1.1067 against the dollar but it was firmer against the pound as it rose to 0.7109. The pound was weaker ahead of today’s inflation figures. It dropped to 1.5570 dollars in late Asian trading.

The Australian dollar rose against the greenback after the release of the Reserve Bank of Australia’s latest meeting minutes but later dropped back. The RBA has been sounding less dovish in recent weeks and has stopped calling for further depreciation of the Australian currency. In its minutes, the RBA said that the Australian dollar has depreciated significantly against the US dollar and this will have a slight upward effect on inflation, while boosting exports. The RBA also noted that there had been an improvement in residential property prices in China.

This was confirmed by data out on Tuesday showing that new home sales in China rose by 0.3% in July from the previous month. Though this did little to boost Chinese equities and the main share indices were down by 5% in late Asian session. The People’s Bank of China set the yuan’s daily midpoint at 6.3966 per dollar, which is slightly below Monday’s rate. But emerging market currencies continued to come under pressure, particularly the Malaysian ringgit, Brazilian real and the Turkish lira. The Thailand baht fell to a 6-year low of 35.65 against the dollar after the bombing attacks in Bangkok on Monday.

The aussie had jumped to 0.7385 against the greenback before plunging to 0.7346 in late Asian session. The kiwi was steadier against the dollar and was last trading at 0.6581. Oil prices remained under pressure and WTI crude futures was down 0.4% to $41.69.

UK inflation data will be the main focus of today’s European session, while US building permits and housing starts data will be closely watched in US trading.

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