Aussie dollar trades higher despite falls in commodities

The Australian dollar has surged in overnight trade despite further falls in commodities, with some analysts asking if it has broken away from its commodity currency label.

At 0700 local time (AEDT) on Tuesday, the currency was trading at 72.34 U.S. cents, up from 71.95 U.S. cents at Monday's Asian close, after peaking at 72.50 early Tuesday morning.

The Australian dollar has added 1.2 percent against the greenback since the last Reserve Bank of Australia meeting, however the difference is even more pronounced against its other major peers.

This is despite further falls in commodities, with iron ore - Australia's largest export - falling to a new decade low overnight, with Singapore futures falling below 40 U.S. dollars per tonne.

"On a trade weight basis, the Australian dollar has added 2.2 percent since the Melbourne Cup RBA meeting despite the commodities story," IG market strategist Evan Lucas said.

"Has the Australian dollar truly broken away from being 'the commodity currency'?"

The Australian dollar as more a liquid proxy to the Asian currency trade, CommSec senior FX strategist Elias Haddad said, noting the lift in the local unit overnight was supported by a lift in China's offshore Yuan.

Australia's central bank meets later on Tuesday for the last monetary policy decision of the year where it's widely expected to keep rates on hold, providing little movement on the currency front.

Cause for volatility will be China's official November purchasing managers index (PMI), to be released at noon AEDT, likely keeping pressure on commodities and weighing on the Australian Dollar if the Aussie hasn't shaken the 'commodity currency' label.

At 0928 AEDT the Australian dollar was trading at 72.25 U.S. cents. Endit