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AAP

2013-01-08

The Australian dollar is slightly higher against its US counterpart, despite losing ground after official figures showed the country recorded its biggest trade deficit since March 2008.

At 1700 AEDT on Tuesday, the Australian dollar was trading at 104.82 US cents, up slightly from 104.72 US cents on Monday.

ANZ currency strategist Andrew Salter said the currency rallied past 105 US cents on Tuesday morning but weakened following the release of monthly trade data for November.

Figures released by the Australian Bureau of Statistics showed the trade deficit widened to $2.637 billion in November, the biggest deficit since March 2008.

"It's just dribbled lower after the trade data but it has been a very quiet day really," Mr Salter said.

Mr Salter said the release of monthly retail figures for November on Wednesday and building approvals figures, for the same month, on Thursday could help drive the Australian dollar's movements this week.

But he said the Australian dollar was likely to move higher over the coming weeks, partly due to the recent improvement in commodity prices.

"I'm finding it harder and harder to construct a case where the Australian dollar goes down materially," Mr Salter said.

"We've got a trade recommendation for our customers to target 107 in the currency over the next month or so we think we'll push higher from here."

At 1700 AEDT, the Australian dollar was at 91.69 Japanese yen, down from 92.01 yen on Monday, and at 79.85 euro cents, down from 80.32 euro cents.

Meanwhile, 10-year Australian bond futures prices were slightly higher.

Commonwealth Bank interest rate strategist Phillip Brown said it had been a quiet day of trading on the futures market, though the release of the monthly trade figures at 1130 AEDT may have helped pushed futures prices higher.

"It (the trade figures) isn't one that tends to move the market too much but it does actually give you a pretty good read on the Australian economy.

"There was only a very small rally, one or two basis points and its hard to even say if that caused it."

At 1630 AEDT on Tuesday, the March 10-year bond futures contract was trading at 96.600 (implying a yield of 3.400 per cent), up from 96.585 (3.415 per cent) on Monday afternoon.

The March three-year bond futures contract was at 97.170 (2.830 per cent), the same level as on Monday.

Evan Schwarten