Forex - Australian dollar gains ahead of trade data, yen up early

Investing.com - The Australian dollar gained on Tuesday in Asia ahead of trade data for November expected to show a wider deficit as commodity prices slumped globally in the tail end of 2014.

AUD/USD traded at 0.8101, up 0.20%, while USD/JPY traded at 119.34, down 0.25%.

Australia's November trade balance is due at 1130 Sydney time (0030 GMT). The data is expected to show a wider deficit of A$1.59 billion compared with a deficit of A$1.3 billion in October.

Then at 0945 Beijing time (0145 GMT), HSBC's China December services PMI is due. In November, the survey showed a reading of 48.8.

Overnight, the dollar remained near nine-year highs against the other major currencies in quiet trade on Monday, as expectations for a U.S. rate hike this year continued to lend broad support to the greenback.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, rose 0.05% to 91.70.

Demand for the dollar continued to be underpinned by the diverging policy outlook between the Federal Reserve and central banks in Europe and Japan.

The Fed is widely expected to raise interest rates in the coming year as the steady economic recovery in the U.S. continues.

EUR/USD hit lows of 1.1858, the weakest since February 2006, and was last at 1.1937, up 0.03% on Tuesday in Asia.

The single currency came under pressure after official data showed that German inflation slowed to the lowest level since 2009 in December.

German consumer price inflation accelerated at an annualized rate of 0.2% last month, below forecasts for 0.3% and slowing from 0.6% in November.

The euro also weakened after European Central Bank President Mario Draghi said Friday the risk of the bank not fulfilling its mandate of price stability is higher now than six months ago.

Uncertainty over Greece’s future in the euro zone also weighed ahead of upcoming elections later this month.