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$A up, driven by rising iron ore prices

Reported by AAP
Friday, December 28, 2012
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The Australian dollar is higher, getting some support from stronger iron prices and gains on the local stock market.

At 1200 AEDT on Friday, the local unit was trading at 103.75 US cents, up from 103.57 cents on Thursday.

Since 0700 AEDT on Friday, the Australian dollar has traded in a tight range between 103.65 US cents and 103.85 cents.

St George chief economist Hans Kunnen said the local dollar's rise was not because of the US budget negotiations to avoid a series of tax hike and spending cuts that are expected to put America into recession, dubbed a fiscal cliff.

"I'd put it down to rising iron ore prices to be honest," he said.

"Part of it is that you watch the equities and you watch the Aussie dollar, on a day-to-day basis they move together, so we've having a firm day in local markets, there could be some offshore buying of Aussie equities.

"It's thin trade, iron ore prices are up and equities are up."

In morning trade, the Australian dollar peaked at 89.835 yen, its highest level since April 2011.

Mr Kunnen said this was because the yen has been losing ground ever since the new Japanese Prime Minister Shinzo Abe came to office and pledged to work with the Bank of Japan to to stimulate the nation's economy.

"It's strengthening against the yen simply on the basis that they're printing money and they've abandoned their low inflation target, so down goes their currency," Mr Kunnen said.

Meanwhile, Australian 10 year-bond futures were firmer at noon.

At 1200 AEDT on Friday, the March 10-year bond futures contract was trading at 96.695 (implying a yield of 3.305 per cent), up from 96.680 (3.320 per cent) on Thursday.

The March three-year bond futures contract was at 97.270 (2.730 per cent), down from 97.280 (2.720 per cent).

01/11/2014 17:03Sydney, Australia. 1 November,2014
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