Trading Room home page

$A slightly higher after good data

Market watch top headlines

Australian reports

World reports

Stocks to watch

BHP, GEM, ORG, TLS, WOW,

AAP

2012-12-07

The Australian dollar is slightly higher, enjoying support following a busy week of mostly good economic data.

At 1700 AEDT on Friday, the local unit was trading at 104.77 US cents, up from 104.61 cents on Thursday.

In the early hours of Friday local time, the Australian dollar peaked at 105.17 US cents, its highest level in over two and a half months, helped by a surprise fall in the Australian unemployment rate for November, announced on Thursday.

CMC Markets senior trader Tim Waterer said the jobs figures and other encouraging economic data helped the Australian dollar outperform other currencies.

"The Australian dollar has taken on something of a 'dual-threat' appearance given that it is a popular pick in the foreign exchange market when risk appetite rises ... when risk aversion mounts, with the currency still garnering the attention of central banks around the globe."

Mr Waterer said caution about how offshore markets would trade on Friday night probably played a part in the Australian dollar falling back below 105 US cents.

He said a further analysis of the European Central Bank's downgrade of economic growth forecasts after its meeting on Thursday could weigh on markets.

The US will release its November employment data on Friday night which could also be a negative.

"However, the report may not hold as much weight as usual given that a low result will likely be attributed to Hurricane Sandy," Mr Waterer said.

At 1700 AEDT, the Australian dollar was at 86.34 Japanese yen, up from 86.27 yen on Thursday, and at 80.87 euro cents, up from 80.12 euro cents.

Meanwhile, Australian bond futures prices were flat.

At 1630 AEDT on Friday, the December 10-year bond futures contract was at 96.955 (implying a yield of 3.045 per cent), steady from Thursday.

The December three-year bond futures contract was trading at 97.400 (2.600 per cent), also steady from Thursday.

Deutsche Bank fixed income strategist David Plank said the market had little to react to because of a lack of significant local data on Friday after a busy week of economic data.

"It's a lot for the market to digest," Mr Plank said.

"Today was always going to be a day of consolidation ahead of more big news tonight in the form of the US employment report."

Mr Plank said bond prices were unlikely to move significantly until US legislators had agreed on a resolution to the so-called fiscal cliff.

Jason Cadden and Elise Scott