The Australian dollar is trading mixed ahead of a swathe of important policy speeches

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The Australian dollar had a quiet session on Tuesday, putting in a mixed performance against the US dollar and major crosses.

Here’s the scoreboard as at 7.45am AEDT.

AUD/USD 0.7844 , -0.0006 , -0.08%
AUD/JPY 88.01 , -0.05 , -0.06%
AUD/CNH 5.1825 , 0.0153 , 0.30%
AUD/EUR 0.6666 , 0.0012 , 0.18%
AUD/GBP 0.5946 , 0.0022 , 0.37%
AUD/NZD 1.0939 , -0.0003 , -0.03%
AUD/CAD 0.9826 , 0.0004 , 0.04%

After hitting a high of .7860 in European trade, the AUD/USD slumped to as low as .7819 as US markets got into full swing, undermined by robust US economic data and speculation that Donald Trump could replace current US Federal Reserve chair Janet Yellen with a more hawkish policymaker.

On the data front, US import prices jumped by 0.7% in September following a 0.6% increase in August, leaving the increase on a year earlier at 2.7%. This offered some clues that previous falls in the US dollar may now be starting to generate imported inflationary pressures.

Elsewhere industrial production rebounded modestly in September following weather disruptions in August, while US home builder confidence hit a five-month high.

The US dollar was also supported by speculation that Donald Trump may appoint Stanford economist John Taylor as the next US Federal Reserve chair, something that helped to lift US bond yields during the session.

“The Stanford economist is considered to be on the hawkish side of the spectrum and therefore the speculation has supported the USD and bumped US rates higher,” said Rodrigo Cartil, currency strategist at the National Australia Bank.

However, as seen in the 5-minute chart below, after falling to a low of .7819 earlier in the session, the AUD/USD ground higher over the latter parts of trade.

AUD/USD 5-Minute Chart

The Aussie put in a mixed performance against the crosses, with the most notable moves against the Kiwi and UK pound.

The New Zealand dollar came under pressure following a weak dairy auction while the UK pound fall sharply despite inflationary increasing at the fastest pace since 2012 as Bank of England governor Mark Carney failed to commit to a rate hike in November.

Turning to the session ahead, there’s no major data releases scheduled that appear likely to generate much movement in the Aussie.

Domestically, Westpac will release its latest Leading Index for September at 10.30am AEDT while the NAB’s cashless retail sales index for September will also be out at 11.30am AEDT.

The latter nailed the weakness seen in Australia’s official retail sales report for August, so there’s likely to be plenty of interest in what this report has to say today.

As a reminder, Australian retail sales have fallen in the past two months.

Outside of those releases, there’s very little on the economic calendar across the Asia region.

Traders should be on alert for any headlines from China’s 19th National People’s Congress that will begin today. However, given this will run for several days, there’s no certainty as to when and if any market sensitive information will be released.

President Xi is expected to deliver the opening speech of the congress at midday AEDT.

In the absence of any headlines, movements in the Aussie will likely be dictated by those in the Japanese yen and Chinese yuan.

Later in the session, data highlights include UK unemployment data — including average weekly earnings growth — along with building permits, housing starts and weekly EIA crude oil inventory data from the United States.

On the central bank front, ECB president Mario Draghi will speak shortly after 7pm AEDT. There’s some speculation that Draghi will hint that the ECB will begin to taper the size of asset purchases at its meeting later in the month.

On the Fed front, FOMC members Dudley and Kaplan will deliver speeches while the Fed will also release its latest Beige Book on economic conditions.

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