The Australian dollar is slightly higher after the release of some encouraging services sector data from the US and the UK.

At 0700 AEST on Tuesday, the local unit was trading at 89.30 US cents, up from 89.09 cents on Monday.

An Institute for Supply Management Activity report showed that the US services sector grew solidly in July, helped by a jump in business activity and new orders.

Another report showed that the UK services sector purchasing managers’ index (PMI) was also strong, surging to a 6.5-year high.

Bank of New Zealand currency strategist Mike Jones said the data helped market optimism in a night of quiet trade.

“We did see quite an upbeat round of global service sector PMIs and that has helped currencies like the Aussie overnight,” he said from Wellington.

“The US and UK PMIs caught the market’s attention. They were both very strong.”

Jones said markets were awaiting the release of local trade figures for June and house price data for the June quarter, due out late on Tuesday morning.

The Reserve Bank of Australia also has its monthly board meeting on Tuesday and is almost certain to cut the cash rate by a quarter of a percentage point to a new record low of 2.5 per cent.

“The broader picture is the Aussie dollar consolidating ahead of the today’s data and RBA meeting today,” Jones said.

“The rate cut won’t surprise anyone, but the broader attention will be on the statement and whether it paves the way for further cuts.”

AAP