The Australian dollar remains trapped in a tight trading range

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The Australian dollar edged lower on Tuesday, trading in a thin range throughout the session.

Here’s the scoreboard as at 8.10am AEDT.

AUD/USD 0.7595 , -0.0006 , -0.08%
AUD/JPY 84.6 , 0.16 , 0.19%
AUD/CNH 5.0181 , 0.0037 , 0.07%
AUD/EUR 0.6413 , 0.0026 , 0.41%
AUD/GBP 0.5686 , -0.002 , -0.35%
AUD/NZD 1.1001 , 0.0007 , 0.06%
AUD/CAD 0.9735 , 0.003 , 0.31%

At .7595, the AUD/USD remains almost unchanged from the level at the start of the week, trapped in a tight trading range as improved investor risk sentiment is offset by modest US dollar strength.

Imre Speizer, senior strategist at Westpac Bank, said the US dollar continued to benefit from higher interest rate expectations and solid US economic data.

In particular, he notes that markets seemed impressed by US Fed Chair nominee Jerome Powell’s first Senate confirmation hearing held on Tuesday.

“Fed Chair nominee Powell responded to a range of questions; more or less confirming a December rate hike remains on the table, noting labour market strength but wage inflation lagging; and suggesting the Fed could tweak the Dodd-Frank and Volcker Rule regulatory reforms,” he said in his morning note.

Speizer said that a solid batch of US economic data also helped to underpin the dollar’s gains.

“The US data was mixed but mostly strong,” he said.

The US Conference Board’s consumer confidence index rose to 129.5, leaving it at the highest level in 17 years. Readings on house price growth and manufacturing activity in the Richmond Fed district also impressed, offsetting a weak result from wholesale inventories.

Those favourable tailwinds for the US dollar, along with renewed geopolitical concerns surrounding North Korea following another missile launch, ensured that the Aussie remained capped during the session despite strength in US stocks.

AUD/USD Hourly Chart

Turning to the session ahead, there are plenty of events arriving in both European and North American trade.

On the central bank front, Janet Yellen, Bill Dudley and John Williams from the US Fed will speak on Wednesday. The Fed will also release its latest Beige Book on Economic Conditions.

On the data calendar, highlights include the second release of US Q3 GDP, German and Spanish CPI along with Eurozone consumer confidence.

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