The US dollar at the back foot against the basket of major currencies on Tuesday, as investors re-assess possibilities of US monetary policy change in the short-term. Expectations of Federal Reserve rate hike towards the end of the year were the main driver of the dollar, which hit fresh seven-month high against its major counterparts in recent period.
The dollar index was down 0.16% in Asia and lost 0.56% on pullback from Monday’s fresh multi-month high at 98.14.
The Australian dollar was the top gainer in Asia and rose 0.83% for the session, on extension of four-day rally from 0.7504 trough. Comments from RBA’s top official that central bank is comfortable with current exchange rate, however, low levels inflation are dampening expectations for rate cuts in the short-term.
New Zealand dollar was also sharply higher on upbeat data overnight, up 0.97% for the session. Both antipodean currencies benefited from near-term weakness of the US dollar, which was boosted by Monday’s lower-than-expected US industrial production data.
Elsewhere, the Euro managed to recover part of recent losses that, on recovery from fresh low at 1.0962 that extends for the second day and probes above 1.1000 barrier, which resisted Monday’s attacks. The single currency was up 0.29% in Asia and gained 0.57% on recovery from 1.0962 low so far.
British pound is attempting to stabilize above 1.2200 handle, which capped Monday’s upside attempts, ahead of today’s series of data from the UK, with focus on inflation numbers in September.
The greenback remains in range trading against Japanese yen, with 104 zone marking a tough barrier for the pair for now, as several attempts higher were unsuccessful.
Oil prices edged higher on Tuesday, after falling sharply on Monday. WTI oil hit low at $49.46 during US session on Monday, but recovered losses and bounced back above $50 barrier, on comments that markets might not be oversupplied as suggested, with global inventories rising less than expected ahead of high-demand winter heating season in the northern hemisphere.
Asian stocks extended gains on Tuesday, in light-volume trading, with investors awaiting GDP data from China on Wednesday. Last week’s downbeat Chinese trade number raised concerns about the health of the world’s second largest economy.
MSCI Index was up 0.8% for the session, extending earlier gains; Australia’s benchmark index was up 0.4%, while Japan’s Nikkei 225 gained nearly 0.8% on softer yen.
European shares followed the track and opened higher on Tuesday.
UK’s FTSE100 index is up 0.78%; French CAC40 opened with gap higher of 0.58% and gained 0.42% from opening, while German DAX also opened with gap-higher and is up 0.21% from opening level.
Highlights of the day

Europe
Data from UK are the highlight of the day, with inflation numbers being in focus. Inflation is expected to rise to 0.9% (y/y) in September from 0.6% in August, with Core CPI seen at 1.4% in September, up from 1.3% in August.
Inflation is expected to rise above 2% in 2017 because of a sharp fall in the value of the pound. At the same time, the economy is expected to slow as Britain begins the process of leaving the EU and tries to negotiate new trade deals, leaving the economy facing a potentially toxic mix of a tumbling currency, rising yields, accelerating inflation and sluggish growth.
BoE Governor Mark Carney told a public meeting on Friday that he was willing to allow inflation to run slightly higher than the central bank’s 2% target, to help employment and allow Britain’s economy to grow.
Data is due at 08:3 GMT.

Important levels

EURUSD
The Euro bounces from fresh 1.0962, but probes above 1.1000 barrier were so far unable to sustain break higher. Next strong resistances lay at 1.1060/80 ahead of1.1100/22. Immediate support is at 1.0993, followed by 1.0962 and key 1.0950 level. Outlook remains bearish, with correction seen ahead of fresh weakness.
GBPUSD
The price is up and establishes above 1.2200 handle, but so far holds within 1.2134/1.2270 range. Upper trigger lies at 1.2270 and break higher would open 1.2375 and 1.2400 barriers. Initial support is at 1.2174, followed by 1.2134 pivot and key 1.2087 support.
AUDUSD
Aussie dollar is in sharp acceleration higher on Tuesday and approaches key barrier at 0.7708, above which to open strong resistances at 0.7730 and 0.7758. First support lies at 0.7663, followed by 0.7645 and 0.7620., Market Analysis