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AAP

2012-12-05

The Australian dollar was almost three-quarters of a US cent higher after economic growth figures came in broadly as expected.

At 1700 AEDT on Wednesday, the local unit was trading at 104.74 US cents, up from 104.38 cents on Tuesday.

Gross domestic product (GDP) grew by 0.5 per cent in the three months to September 30, down a touch from 0.6 per cent in the June quarter, with the dip caused mainly by falling commodity prices.

Over the year to September 30, the economy grew by 3.1 per cent.

CMC Markets senior trader Tim Waterer said the Australian dollar maintained its levels in the face of falling commodity prices and slower economic growth.

"The Australian dollar has exhibited Teflon-like qualities recently by ascending despite events, which may on the surface have suggested moves to the contrary," he said.

"The GDP reading today caused a mild downward reaction in the Australian dollar but the ground was quickly recovered.

"The growth of 0.5 per cent for the quarter versus 0.6 per cent forecast did not miss the mark by miles, but equally it was nothing to get too excited about, which explains the fairly mild response by the market."

Mr Waterer said the focus for the market would be the Australian employment figures for November on Thursday and US employment data on Friday, also for November.

At 1700 AEDT, the Australian dollar was at 86.17 Japanese yen, up from Tuesday's close of 85.71 yen, and at 79.90 euro cents, down from 79.96 euro cents.

Meanwhile, bond futures prices fell slightly after the release of the GDP figures but finished the day unchanged from market close on Tuesday.

JP Morgan interest rate strategist Sally Auld said the slight fall may have been attributed to market expectations of weaker GDP growth.

"I don't know whether people were a little bit nervous about the prospect of a soft number but as it turned out it was an okay number," she told AAP on Wednesday.

She said the market would trade in a similar price range on Thursday.

"It doesn't look overly exciting in one direction or another," she said.

Ms Auld said the market has been waiting for developments in negotiations between US politicians trying to avoid the so called fiscal cliff of tax hikes and spending cuts due to apply automatically in 2013.

At 1630 AEDT on Wednesday, the December 10-year bond futures contract was at 96.900 (3.100 per cent), unchanged from Tuesday afternoon.

The December three-year bond futures contract was trading at 97.380 (2.620 per cent), the same level as on Tuesday.

Jason Cadden and Elise Scott