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AAP

2012-11-09

The Australian dollar is higher after Chinese economic data showed strong growth in the country's retail sector.

At 1700 AEDT on Friday, the local currency was trading at 104.25 US cents, up from 104.07 cents on Thursday.

The Australian dollar traded as low as 103.79 US cents early on Friday, following a one per cent fall in US stocks overnight.

ANZ foreign exchange strategist Andrew Salter said the currency strengthened during the Asian session on Friday.

"The overall theme of the day is that it (the Aussie dollar) has been pretty well supported," he said.

The Australian dollar received a boost late on Friday following the release of Chinese economic data at 1630 AEDT.

Official figures showed retail spending in the world's second largest economy rose 14.5 per cent in the year to October, while fixed asset investment rose 20.72 per cent in the first 10 months of 2012.

Mr Salter said the Australian dollar shrugged off news that the Reserve Bank of Australia had downgraded its forecasts for GDP growth for 2013.

In its quarterly Statement on Monetary Policy, the RBA said it now forecast GDP growth of three per cent in 2013, down from a forecast 3.75 per cent in 2012.

Mr Salter said he expected the Chinese data to be the main driver for the Australian dollar during the New York and European sessions overnight on Friday.

At 1700 AEDT, the Australian dollar was at 82.91 Japanese yen, down from 83.14 Japanese yen, and at 81.60 euro cents, up a smidgen from 81.59 euro cents.

Meanwhile, Australian bond futures prices are higher amid market concerns about the US Congress' ability to cut a deal on the so called fiscal cliff - relating to tax cuts, reducing debt and government spending - following this week's presidential election.

At 1630 AEDT on Friday, the December 10-year bond futures contract was trading at 96.975 (implying a yield of 3.025 per cent), up from 96.925 (3.075 per cent) on Thursday.

The December three-year bond futures contract was at 97.430 (2.570 per cent), up from 97.390 (2.610 per cent).

Commonwealth Bank head of debt research Adam Donaldson said investors were concerned about how President Barack Obama would deal with the looming fiscal cliff, and how it would affect the US economy.

"Last night we had a continuation of the negative performance in stock markets," he said.

"That's lending a bid tone to markets, so bond prices have been higher."

AAP ews/css/jmc

Evan Schwarten and Caroline Smith