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Forex - Aussie gains after RBA minutes reiterate steady interest rates

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Investing.com -

Investing.com - The Australian dollar gained on Tuesday after minutes of the August Reserve Bank of Australia board meeting showed an uncertain outlook for the economy, but signalled rates would remain at a record low 2.5% for a "period of stability."

AUD/USD traded at 0.9336, up 0.11%, after the minutes.

Earlier, the New Zealand dollar weakened as producer prices for the second quarter unexpectedly fell and ahead of a central bank forecast for inflation expectations.

NZD/USD traded at 0.8436, down 0.46%, ahead of the Reserve Bank of New Zealand issuing third quarter inflation expectations at 0300 GMT.

In the second quarter, the RBNZ said its one-year inflation expectation was 2% and two-year view 2.35%. The RBNZ aims to keep core inflation between 2% to 3%.

Earlier, New Zealand reported second quarter producer prices fell 1% quarter-on-quarter, compared to an expected gain of 0.7%.

Overnight, the dollar traded higher against most major currencies, buoyed by upbeat data out of the U.S. housing sector and by hopes diplomatic efforts to end the Ukraine conflict will produce concrete results.

Russian and Ukraine foreign ministers held talks earlier, and while no resolution to end the conflict emerged, the flow of humanitarian aid deliveries into Ukraine from Russia continued, which calmed nerves in global markets.

On Friday, news that Ukrainian troops destroyed a portion of a Russian column of armored vehicles inside Ukraine rattled nerves across the globe, which pushed the greenback into negative territory.

Elsewhere, upbeat U.S. data boosted the greenback by keeping expectations firm that the Federal Reserve remains on track to end its stimulus bond-buying program around October and raise interest rates some time in 2015.

The National Association of Home Builders/Wells Fargo Housing Market Index increased to 55.0 in August, a seven-month high, from 53.0 in July, beating estimates for a reading of 53.0.

A level above 50.0 indicates a favorable outlook on home sales and below indicates a negative outlook.

"As the employment picture brightens, builders are seeing a noticeable increase in the number of serious buyers entering the market," said NAHB Chairman Kevin Kelly.

The euro, meanwhile, continued to come under pressure due to ongoing expectations that monetary stimulus programs in the U.S. will wind down at the same time the European Central Bank takes steps to loosen policy.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.02% at 81.65.

On Tuesday, the U.S. is to release reports on building permits, housing starts and consumer inflation.

Investors are watching an annual meeting of top central bank officials and economists in Jackson Hole, Wyoming from August 21 to 23.

The spotlight will be on Fed Chair Janet Yellen, who will speak on Friday in her first appearance at Jackson Hole as head of the U.S. central bank.

Traders will also pay close attention to the minutes of the Fed's July policy meeting due to be published on Wednesday for further clues about the timing of future interest rate hikes.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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