The dollar has bounced ahead of today’s highly anticipated interest rate decision, following weaker than expected data out of the US.

At 0700 AEDT on Tuesday, the local currency was trading at 78.06 US cents, up from 77.81 cents on Monday.

The Australian dollar bounced as high as 78.31 US cents overnight following some disappointing economic reports out of the US.

Official figures showed US consumer spending fell in December while a manufacturing report came in weaker than expected.

“The Australian dollar/US dollar has been given something of a leg-up this morning,” National Australia Bank, senior economist, David de Garis said. “It’s come in the wake of somewhat weaker than expected US economic reports and some consequent slippage in the US dollar.”

Economists are divided on whether or not the Reserve Bank will cut the cash rate to a new record low of 2.25 per cent at 1430 AEDT while the market is pricing in a two in three chance of a cut.

Also coming up today will be building approvals and international trade figures from the Australian Bureau of Statistics, as well as the ANZ/Roy Morgan weekly consumer confidence reading.

AAP