Investing.com - The Aussie rebounded in Asia after strong retail sales figures lifted sentiment.
AUD/USD traded at 0.7633, up 0.17%, while USD/JPY changed hands at 102.84, down 0.05%. GBP/USD traded at 1.2731, up 0.05%. Comments from Chicago Fed President Charles Evans were noted.
Retail sales data for August in Australia showed a 0.4% gain, well above the 0.2% increase seen month-on-month.
The Reserve Bank of Australia may note the retail sales data after recent months showed a slowing in household consumption, though the outlook for household consumption remains uncertain as indicated by AI Group's performance of services index that saw the retail subsector fall into contraction in September for the first time since March.
Earlier in Australia, the AIG services index came in at 48.9 in September from 45.0 level previously. "Stronger business confidence and activity levels will require more active leadership from government - including meaningful improvements to business taxation rates and the regulatory burden," AI Group Chief Executive Innes Willox said.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.04% to 96.06.
Overnight, the dollar extended gains to a two-month high against the other major currencies on Tuesday, as comments by Richmond Federal Reserve head Jeffrey Lacker and upbeat U.S. data boosted hopes for a U.S. rate hike before the end of the year.
Richmond Fed governor Jeffrey Lacker suggested on Tuesday that interest rates should already be at least 1.5%, compared to the current range of 0.25%-0.50%, in a speech delivered to the West Virginia Economic Outlook Conference in Charleston, West Virginia.
Lacker also stressed the need for “pre-emptive” action to combat future inflation.
The U.S. dollar was also boosted after upbeat manufacturing activity and consumer sentiment data sparked optimism over the strength of the economy and supported the case for a rate hike by the Federal Reserve before the year end.
Market participants were focusing on Friday’s U.S. nonfarm payrolls report for further indications on the strength of the job market, as the Federal Reserve has indicated that future interest rate decisions will be data-dependent.
Research firm Markit said on Tuesday that its U.K. construction purchasing managers' index rose to 52.3 in September from August’s reading of 49.2. Economists had expected the index to drop to 49.0 in September.
But the pound remained under broad selling pressure amid concerns over a ‘hard brexit’ after British Prime Minister Theresa May set a March deadline to begin the UK's formal departure process from the European Union.