Aussie Dollar Fading off Earlier Gains Ahead of RBA Rate Decision

The Australian dollar's gains in the North American session are leveling off ahead of the Reserve Bank of Australia's rate decision to come in afternoon Sydney trading, where the bank is expected to cut by 50 basis points to 5.50%.

Nevertheless, strategists say the currency's moves remain dominated by risk appetite.

Matthew Strauss, strategist at RBC Capital Markets said, ""Barring a major surprise similar to a month ago, FX reaction should be muted following the 50bp RBA cut and a dovish statement. The tug-of-war between risk aversion and risk appetite will continue to dominate AUD and NZD trading."

John Hardy, strategist at Saxo Bank, speculated whether the RBA cut will have an effect on the currency. "The RBA is expected to trim another 50 bps off the Cash Target. AUD has recovered very sharply of late - will tonight mark a turning point?" he said.

Tomorrow, markets will receive Australia's trade balance for September, expected to post a A$500 million surplus following August's A$1364 million surplus.

Building approvals will also be released, expected to decline 1.0% month over month, after August saw a 3.7% drop.

The euro was up 0.0086 to 1.8778 against the Australian dollar.

The Australian dollar was down 0.0073 to 0.6692 against the greenback.

The Canadian dollar was up 0.0119 to 1.2636 against the Australian dollar.

The Australian dollar was down 1.0646 to 65.9804 against the yen.

The Australian dollar was up 0.0069 to 1.1369 against the New Zealand dollar.

All data taken at 8:35 p.m. EST