Dollar down on weak data

THE Australian dollar is lower in sluggish trade following a series of weak data readings in the US and UK. .

THE Australian dollar is lower in sluggish trade following a series of weak data readings in the US and UK..

At 12pm AEDT today, the local unit was trading at 103.35 US cents, down from 103.58 cents yesterday.

Since 7am AEDT, it has traded between 103.28 US cents, and 103.43 cents.

Commonwealth Bank currency strategist Joseph Capurso said the dollar had been weakened overnight by disappointing US and European data, but was moving within a tight range today.

"There's not a lot of trading going on at the moment," he said.

US PhillyFed data showed a slump in manufacturing activity in the US mid-Atlantic area in November - much attributed to Superstorm Sandy. The data's business activity index fell to -10.7, from 5.7 the month before.

Meanwhile, weekly unemployment claims rose to 439,000 - its highest in 18 months - also influenced by the storm.

UK retail sales were also weak - falling by 0.8 per cent in October, more than the expected drop of 0.1 per cent.

Mr Capurso said that the currency would be unlikely to move up to 104 US cents on the day.

"It's not likely to move much higher," he said. "There's not much market data on the horizon."
 
"The only big thing in the near-term is President Obama's meeting with US congressional leaders in order to avoid the fiscal cliff."

Mr Capurso said the market would be looking for some clear evidence that the fiscal cliff - a series of tax raises and spending cuts which come in at the beginning of next year - would be tackled comprehensively.

"I think if they don't come out with something concrete, I think we'll see a big rush into US Treasuries," he said. "That would cause the Aussie dollar to fall."

Meanwhile, Australian bond prices were lower at noon. At 12pm AEDT today, the December 10-year bond futures contract was at 97.035 (implying a yield of 2.965 per cent), down from 97.060 (2.940 per cent) at yesterday's close.

The December three-year bond futures contract was trading at 97.510 (2.490 per cent), down from 97.530 (2.470 per cent).