Forex - Aussie gains on NAB, home loans, shrugs off China prices

Investing.com - The Australian dollar gained in Asia on Tuesday after an upbeat survey on business views, shrugging off downbeat data from China on consumer and producer prices.

Chinese consumer prices fell 0.2% in May, weaker than the flat reading expected, while producer prices edged down 4.6%, also weaker than the 4.5% decline seen.

The data has been volatile of late and thus waning in importance as to market direction, but the People's Bank of China will take note with some policy reaction possible.

China's National Bureau of Statistics said falling vegetable and egg prices dragged the CPI down by 0.39 percentage points.

AUD/USD rose 0.01% to 0.7705, while USD/JPY changed hands at 124.54, up 0.04%. EUR/USD traded at 1.1296, up 0.03%.

In Australia, the National Australia Bank business confidence and conditions index was upbeat. Conditions came in at plus-7 for both, compared to the previous month reading of plus-3 for confidence and plus-4 for conditions.

Also in Australia, home loans rose 1.0% month-on-month in April, beating the 2.0% drop seen.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.04% to 95.19.

Overnight, the dollar remained broadly lower against a basket of other major currencies on Monday, as investors continued to lock-in profits from the greenback's recent rally and as trading remained quiet with no major U.S. economic reports to be released throughout the session.

The dollar strengthened broadly after the Labor Department reported on Friday that the U.S. economy added 280,000 jobs in May, ahead of economists forecast for 220,000.

Hourly earnings increased 0.3% in May, after a 0.2% increase in April.

The upbeat data, particularly the pick-up in wage growth underlined the view that the economy is on track to rebound after a weak first quarter and bolstered expectations that the Federal Reserve could start to hike interest rates at its September policy meeting.

EUR/USD climbed 0.86% to 1.1212 on Monday as German 10-year bund yields move higher, re-approaching last week’s nine-month peak.

German bund yields act as benchmarks for European financial markets and higher yields push the euro higher against the dollar. Yields rise as prices fall.

The recent rally in bund yields has been spurred by signs of an economic recovery in the euro area.

But investors remained cautious after German Chancellor Angela Merkel warned earlier Monday that "there isn’t much time left" to reach an agreement on a cash-for-reforms deal needed to unlock more financial aid before Greece runs out of money.

Athens delayed a key debt payment to the International Monetary Fund on Friday, saying it would repay the money along with other payments due this month by the end of June.