Dollar Stands Strong

The Australian dollar perked up from close to one-week lows following the Reserve Bank of Australia (RBA) increased rates for the eighth time in as many months.

The U.S. dollar index, which calculates the currency versus six major peers, was at 105.24, steady following Monday’s 0.7% rally, it is most significant since Nov. 21.

It had dropped to 104.1 on Monday for the first time after June 28. It later reversed course after data revealed U.S. services industry activity suddenly picked up in November, with employment recovering.

The Federal Open Market Committee determines policy on Dec. 15. Traders predict a half-point increase to a 4.25-4.5% policy band and a terminal rate of just over 5% in May.

Australian Dollar Rising

German industrial orders rebounded more than anticipated in October but failed to support the euro, flat at $1.0500 the following Monday, touching its highest level after late June.

The Western price cap on Russian seaborne crude, which arrived into force on Monday, may begin to show its influence on the energy market soon, stated Francesco Pesole, FX strategist at ING.

The Aussie dollar increased 0.3% to $0.6718, going back some of a 1.4% drop on Monday as the RBA told it was not on a preset path to tightening policy but that inflation was still high.

Matt Simpson, a senior analyst at brokerage City Index in Brisbane, said that while the RBA has talked about a pause publicly, we may be farther away from one than he originally thought.

In volatile Monday trading, the Aussie gained a 2-1/2-month peak of $0.6851