Australia's currency fought back declines against the U.S. dollar Tuesday that stemmed from the worst reading of Australian business conditions in years, while the greenback won back its losses against the euro. The Australian dollar AUDUSD +0.66% traded at 91.24 U.S. cents. It had sat at 91.18 cents just before the National Australia Bank said its survey of business conditions hit a more-than-four-year low and "paints a worrying picture" of Australia's economy. The NAB survey sent the Aussie falling below 91 cents, as its June survey of Australian businesses showed a reading on conditions fell to minus 8 points from minus 4 points in May, the weakest level since May 2009. NAB said its survey indicated business conditions in Australia were "very bad" in the retail, mining and manufacturing sectors despite low interest rates and a decline in the Australian dollar, though signs were slightly better for exports broadly. Worries about slowing in the Australian economy as it faces a peak in mining investment have contributed to a more-than-12% loss in the Aussie against the dollar this year. "Domestic weakness implied by this survey, along with softness in China, a weaker terms of trade and financial market volatility, encourages us to bring our next expected rate cut forward to August (previously November), assuming no downside surprises from unemployment or inflation," NAB chief economist Alan Oster wrote in the survey's report. Reserve Bank of Australia Gov. Glenn Stevens earlier this month indicated the bank may further cut the policy interest rate, which currently stands at a record-low 2.75%. NAB said it expects the bias to easing to continue beyond August. NAB's reading on business confidence in June, however, slightly improved to a result of zero from minus 1 point in May. At the same time the NAB survey was released, China's National Bureau of Statistics saidconsumer prices in June rose a faster-than-expected 2.7% from the year-earlier month. Meanwhile, wholesale prices in China — Australia's largest trading partner — logged a 16th consecutive month of deflation. Dollar index regains ground The ICE dollar index DXY -0.07% , which measures the U.S. unit against six other major currencies, rose to 84.304 from 84.172 late Monday in North America. The WSJ Dollar Index XX:BUXX -0.09% , which measures the currency against a slightly wider basket, rose to 76.07 from 75.99. The indexes were aided by the greenback's advance against the euro, as the euroEURUSD +0.11% bought $1.2855, down from $1.2871 late Monday. Europe's shared currency had risen on Monday, finding some support afterGreece reached a deal with international creditors. The euro's gain on Monday helped pull the ICE dollar index from a three-year high, which it reached after U.S. jobs data for June last week reinforced expectations the Federal Reserve will soon start tapering the pace of monetary stimulus to the economy. Minutes from the Fed's meeting last month are due Wednesday, and they could provide more insight into when the central bank may start slowing the pace of its asset purchases. "Given how much the dollar has risen, the minutes may need to show significant support for tapering in September for the dollar to extend its gains," wrote BK Asset Management managing director Kathy Lien in a note Monday. "However, even if the [Federal Open Markets Committee] minutes do not do the trick, Fed Chairman Ben Bernanke could give the dollar a boost" when he speaks on Wednesday afternoon, Lien said. Bernanke, who will address the National Bureau of Economics Research in Boston, is expected to take questions from the audience, "an environment that is ripe for him to say something that could cause more volatility in the dollar," said Lien. The British pound GBPUSD +0.14% lost ground against the buck Tuesday, fetching $1.4939 compared with $1.4950. Investors will watch for the Tuesday release of U.K. industrial production figures for May. Against the Japanese yen, the dollar USDJPY +0.13% traded at ¥101.06, up from ¥100.96.
