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  • AUD/USD rose sharply on upbeat Chinese data on Tuesday.
  • US Dollar Index stays in the negative territory below 93.00.
  • RBA reiterated that it will not hike rates until progress is made toward full employment.

The AUD/USD pair gained traction during the Asian session on Tuesday and climbed to its highest level since September 3rd at 0.7336. As of writing, the pair was up 0.57% on a daily basis at 0.7330.

AUD capitalizes on strong Chinese data

Earlier in the day, the data from China showed that Industrial Production in August expanded by 5.6% on a yearly basis and surpassed analysts’ estimate of 5.1%. Additionally, Retail Sales in the same period increased by 0.5% following July’s contraction of 1.1%.

In addition to the upbeat data from China, the Reserve Bank of Australia’s September Meeting Minutes helped the AUD preserve its strength. The RBA reiterated that it will not hike the policy rate until progress is made toward full employment and inflation but noted that the downturn was not as severe as initially expected.

On the other hand, the upbeat market mood, as reflected by rising global equity indexes, is making it hard for the greenback to find demand as a safe-haven. The US Dollar Index, which closed the first day of the week modestly lower, extended its slide on Tuesday and was last seen losing 0.23% on a daily basis at 92.85.

Later in the day, the Federal Reserve Bank of New York’s Empire State Manufacturing Survey, Import Price Index and Export Price Index data will be featured in the US economic docket. Meanwhile, the S&P 500 futures are up 0.6% on the day and the USD could remain on the back foot if Wall Street’s main indexes build on Monday’s gains in the second half of the day.

Technical levels to watch for