Dollar surges after strong housing figures

THE Australian dollar is above US95c thanks to a big surge in local home building approvals for September.

The Australian dollar dropped as low as 94.42 US cents after the announcement. (AAP Image/Julian Smith)

THE Australian dollar is above 95 US cents thanks to a big surge in local home building approvals for the month of September.

At 12pm AEDT today, the local unit was trading at 95.04 US cents, up from 94.96 cents yesterday.

During the morning, the Australian dollar traded between 94.57 US cents and 95.04 cents.

New home building approvals across Australia rose 14.4 per cent in September, the Australian Bureau of Statistics said, much better than the forecast rise of 2.8 per cent.

The Australian dollar shot higher on the data because the market was only expecting a small increase, ForexCT head of research Steven Dooley said.

"Suddenly there was a punch higher, 14.4 per cent is a huge move in building approvals," he said.

"It made the market focus back on the fact that we're not likely to get another rate cut from the Reserve Bank of Australia.

"The Aussie dollar has been under a lot of pressure lately and that pop higher caught out a lot of people."

Earlier, the Australian dollar dipped to a three week low after the US Federal Reserve said the US economy still needed support and it would maintain it aggressive economic stimulus program.

"I think the market had been hoping to hear that the Fed was concerned about financial markets and economic growth and that the stimulus would be in place for a lot longer, but the Fed didn't confirm that," Mr Dooley said.

That's why we saw a push higher in the US dollar and a move lower in the Aussie dollar and gold."

Mr Dooley said the next focus for currency markets will be the release of official Chinese manufacturing figures for October, due on Friday.

He expects the Australian dollar to trade in a range between 94.4 US cents and 95.2 cents this afternoon.

Meanwhile, bond futures prices were lower.

At 12pm AEDT today, the December 10-year bond futures contract was trading at 96.010 (implying a yield of 3.990 per cent), down from 96.065 (3.935 per cent) yesterday.

The December three-year bond futures contract was at 96.960 (3.040 per cent), down from 97.030 (2.970 per cent).

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