Forex - Australian dollar gains despite downbeat news

Investing.com - The Australian dollar reversed course on Tuesday and rose despite a downbeat business survey and bearish remarks from a central bank official.

USD/JPY traded at 107.23, up 0.36%, while AUD/USD changed hands at 0.8787, up 0.14%.

Japan's September CGPI rose 3.6%, in line with expectations and the 18th straight year-on-year rise.

The Australian dollar remains higher than economic fundamentals suggest, even after declines in recent weeks, Reserve Bank of Australia Assistant Governor Guy Debelle said Tuesday.

RBA's Debelle says Aussie higher than economic fundametals suggestAustralia dollar higher than warranted, Debelle says
"While that depreciation will do something to foster more balanced growth in the Australian economy, it has only served to take the trade-weighted index back to its levels of earlier in the year," he said.

He said that "we are in an unusual environment where monetary policy settings in the four major economic regions - the U.S., China, Europe and Japan - are moving in divergent directions."

This is challenging for both markets and policy makers and "creates a complicated environment for setting monetary policy in other parts of the world, including here in Australia," Debelle said.

The NAB's business confidence and business conditions survey showed confidence at plus 5 in September, down from plus 7 the previous month and conditions at plus 1, from plus 3 in August.

The Monetary Authority of Singapore kept policy steady in its latest semi-annual monetary policy statement.

"MAS will therefore maintain its policy of a modest and gradual appreciation of the S$NEER policy band," according to a statement posted on the Website.

"There will be no change to the slope and width of the policy band, and the level at which it is centred."

Overnight, the dollar weakened against most major currencies after a key Federal Reserve official said over the weekend that rate hikes may come later rather than sooner if the global economy continues to flounder.

While the U.S. is seen closing its monthly bond-buying programs this month and hiking interest rates in 2015, expectations that the Federal Reserve may take its time when tightening policy next year began to build on Monday, especially in wake of dovish comments out of the U.S. central bank.

"If foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise," Federal Reserve Vice Chair Stanley Fischer said in prepared remarks of a speech he delivered at the annual International Monetary Fund/World Bank meeting over the weekend.

Bottom fishers also gave the single currency an edge over the dollar, though gains were seen as limited on concerns the European economy faces building headwinds, which may require fresh stimulus measures from the European Central Bank.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was rose 0.17% at 85.42.