AUD stronger ahead of NAB survey on confidence, conditions

The Australian dollar gained in early Asian trade on Thursday ahead of a bank survey on conditions and confidence closely followed by the central bank.

Australia, the NAB's Business Confidence and Current Conditions index are due for release at 1130 Sydney (0130 GMT), with recent surveys showing a fall in both confidence and conditions.

AUD/USD traded at 0.9389, up 0.20%, ahead of the data.

Overnight, the dollar traded largely higher against most major currencies, looking past dovish comments from Federal Reserve Chair Janet Yellen and rising on demand from investors ditching the yen due to strong Chinese data.

The Federal Reserve will keep benchmark interest rates low even as the economy improves to ensure sustained recovery, Yellen said earlier.

Monetary authorities hope to see the unemployment rate at the end of 2016 reaching 5.2-5.6% and inflation at 1.7-2%, Yellen said.

'If this forecast was to become reality, the economy would be approaching what my colleagues and I view as maximum employment and price stability for the first time in nearly a decade. I find this baseline outlook quite plausible,' Yellen said in prepared remarks in a speech she delivered at the Economic Club of New York.

In the meantime, markets should pay close attention to inflation and unemployment rates, as hiccups can serve as weather vanes when it comes to monetary policy and how long interest rates remain low.

'The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained,' Yellen said.

Elsewhere, U.S. industrial production rose 0.7% in March from February, beating expectations for a 0.5% reading, which supported the dollar despite soft housing data.

The Commerce Department reported earlier that housing starts rose 2.8% in March to 946,000, missing analyst forecasts for a 6.4% increase to 973,000 units.

Separately, building permits, an indicator of future demand for housing, fell 2.4% in March to 990,000, defying market expectations for a 0.6% increase.

Meanwhile in the euro zone, data revealed that the annual inflation rate slowed to 0.5% in March from 0.7% the previous month, but in line with expectations

Core inflation, which strips out volatile items like food and energy costs, fell to 0.7% from 1.0% in February, missing expectations for a 0.8% reading.

Euro zone inflation has now been in the European Central Bank's danger zone of below 1% for six straight months, fuelling speculation that policymakers will need to implement fresh stimulus measures to shore up the fragile recovery in the euro area.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.14% at 79.80.

On Thursday, the U.S. is to publish data on initial jobless claims and a report on manufacturing activity in the Philadelphia region.