Forex - Australian dollar gains smartly after strong China data

Investing.com - The Australian dollar gained on Tuesday after a raft of key China economic data showed expected to stronger activity, reversing sentiment from earlier central bank board minutes for October.

AUD/USD traded at 0.8810, up 0.29%, while USD/JPY changed hands at 106.83, down 0.11%. EUR/USD traded at 1.2799, down 0.01%.

China said third quarter GDP rose 7.3% on year, meeting expectations, while industrial output for September increased 8.0% on year, above the 7.5% forecast and retail sales in the same month gained 12% year, above the 11.8% seen.

"Given the information available, the Board's judgement was that the current stance of monetary policy continued to be appropriate for fostering sustainable growth in demand and inflation outcomes consistent with the target over the period ahead. Members considered that the most prudent course was likely to be a period of stability in interest rates," the minutes said.

Later on, Deputy Governor Philip Lower speaks at 0855 GMT.

Overnight, the dollar traded largely lower against most major currencies, albeit in tight trading ranges as investors priced in the possibility that softer European and Asian economies could dampen U.S. recovery.

While many investors have priced in a cooler global economy into trading, concerns the U.S. may feel some fallout allowed the dollar to soften on Monday.

Germany’s Bundesbank reported earlier the country’s economy barely grew in the third quarter, as industrial output slowed and business sentiment deteriorated.

In its monthly report the German central bank said that while the euro zone’s largest economy was unlikely to enter a recession the economic outlook for the fourth quarter was cautious.

The ECB launched its new stimulus program on Monday, purchasing covered bonds in a bid to increase liquidity in the region.

Still, the dollar softened against the euro on concerns that even though the Federal Reserve is seen closing its monthly bond-buying program next week, rate hikes may come later in 2015 than once anticipated to make sure cooling European and Asian economies won't seriously dampen U.S. recovery.

The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.04% at 85.08.

On Tuesday the U.S. is to release private-sector data on existing home sales.