| Subject: Australian Dollar Down Late In Thin, Nervous Trade 25/11/2010 4:05PM |
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Date Posted: 24/11/10 21:29:38
Australian Dollar Down Late In Thin, Nervous Trade
25/11/2010 4:05PM
Rates At 0450 GMT
Latest Change
AUD/USD 0.9792 -0.1%
AUD/JPY 81.78 +0.3%
6.5% May, 2013 5.1509% +0.05
4.5% Mar, 2020 5.5098% +0.06
10-Yr Spread To U.S. +267 bps +4 bps
SFE Dec 3-Year Futures 94.79 -0.06
SFE Dec 10-Year Futures 94.46 -0.06
SYDNEY (Dow Jones)--Thin trade before the U.S. Thanksgiving holiday and a wider nervous mood undercut the Australian dollar on Thursday. Stronger-than-expected domestic corporate investment numbers were ignored as dealers kept their focus on the global horizon.
"The currency and bond markets are looking towards North-South Korean tensions and peripheral European sovereign and bank capital issues for guidance, as well as being impacted by North American holiday trading," TD Securities Head of Asia Pacific Research Annette Beacher said.
Although capital expenditure by Australian businesses jumped a large 6.2% in the third quarter, according to the Australian Bureau of Statistics, economists said weaker plant and equipment spending means the near-term outlook for monetary policy is unchanged.
But it also suggests a much-vaunted avalanche of spending by businesses in the resources sector is still waiting to be unleashed, something that could change the policy outlook next year.
"This leaves us continuing to look for a very significant pick-up in investment in coming quarters but also concluding that the case for any near-term rate hike from the (Reserve Bank of Australia) remains difficult to make," Deutsche Bank Economist Adam Boyton said.
At 0450 GMT, the Australian dollar traded at US$0.9792, down from US$0.9802 late Wednesday. Against the Japanese yen, the currency traded at Y81.78, from Y81.56.
"The battler looks lost in a range," one dealer said. "US$0.9650 is the support level that needs to hold. Short term resistance is up at US$0.9900."
In the bond market, the December three-year bond futures contract fell six ticks to 94.79.
Next week is a busy one for local data. Gross domestic product, new home sales, retail sales, building approvals and private sector credit are all due for release. But the numbers aren't likely to prompt a wave of expectations the RBA will need to tighten again in December.
"Since the RBA's November rate hike, the unemployment rate has risen and it looks like GDP growth will be weaker than consensus. This increases the likelihood that first quarter 2011 will pass without a rate rise while locking-in the view that there will be no rate hike in December," Citi Economist Josh Williamson said.
--By Enda Curran, Dow Jones Newswires; 61-2-8272-4687; enda.curran@dowjones.com
(Data provided by Reuters)
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