The Australian dollar was slightly higher Thursday after trading in a narrow range throughout the session, even as local data showed capital expenditure in the third quarter was stronger than expected. Private new capital spending on buildings and equipment in Australia rose 2.8% to 42.5 billion Australian dollars ($44.5 billion) in the third quarter from the second quarter, beating economists’ expectations for a 2.0% rise, according to figures released Thursday by the Australian Bureau of Statistics. Spending rose 14.2% from the third quarter of 2011, the bureau said. While in the short term the Australian dollar will take its lead from any comments in the market about a possible deal to solve the U.S. fiscal cliff issue, some focus is turning to the Reserve Bank of Australia’s final policy meeting for the year, which is scheduled for next week. Barclays said in a note that with interest rate markets pricing in 18 basis points of cuts and analysts split between no change and a cut, a cut would likely lead to a narrowing of Australia-U.S. interest rate differentials and this will place downward pressure on the Australian dollar against the greenback. The Aussie dollar was trading at US$1.0468 at 0420 GMT up from US$1.0456 at the end of Sydney trade on Wednesday. It traded between a range of US$1.0458 and US$1.0481.
EasyForexNews Research Team