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AAP

2012-11-29

The Australian dollar is higher as traders shrugged off a weaker domestic capital expenditure outlook and focused on positive comments about US debt negotiations.

At 1700 AEDT on Thursday, the local currency was trading at 104.67 US cents, up from 104.48 US cents on Wednesday.

Commonwealth Bank currency strategist Peter Dragicevich said the currency lost some ground following the release of official domestic capital expenditure data that showed a downwards revision to spending plans for 2012/13.

The biggest drop in the Australian Bureau of Statistics figures was in the mining sector, with spending expectations down more than eight per cent compared to three months ago.

"Initially it (the Australian dollar) came off a little bit but it seemed to find quite a bit of support after that," Mr Dragicevich said.

"The broader issues in the global economy have helped to support it."

He said positive commentary from US President Barrack Obama and House speaker John Boehner surrounding the US `fiscal cliff' negotiations had given markets a boost.

The fiscal cliff is a series of automatic tax hikes and spending cuts due to apply from 2013 unless Republicans and Democrats can agree to alternative measures to bring down the country's deficit.

Mr Dragicevich said the next major event for the Australian dollar would be Chinese manufacturing data on Saturday.

At 1700 AEDT on Wednesday, the Australian dollar was at 85.96 Japanese yen, up from 85.49 yen on Wednesday and at 80.83 euro cents, the same level as on Wednesday.

Meanwhile, Australian bond futures prices were almost unchanged.

At 1630 AEDT on Thursday, the December 10-year bond futures contract was at 96.860 (implying a yield of 3.140 per cent), down slightly from 96.865 (3.135 per cent) on Wednesday.

The December three-year bond futures contract was trading at 97.330 (2.670 per cent), unchanged from Wednesday.

Evan Schwarten