Dollar higher on Spanish bailout, rating

THE Australian dollar has risen almost half a US cent, following optimistic news from Spain and falls in the US dollar.

THEAustralian dollar has risen almost half a US cent, following optimistic news from Spain and falls in the US dollar.

At 12pm AEDT today, the currency was trading at 103.15 US cents, up from 102.67 US cents.

Commonwealth Bank currency strategist Joseph Capurso said the Aussie dollar had risen in accordance with other currency movements, as the greenback fell following news about Spain's credit rating overnight.

"It's actually because of the US dollar, which has been sold off against most other currencies," he said. "Part of that selloff is due to some good news about Spain. That was partly due to Moody's decision not to cut the country's credit rating.

"That's given the euro a fair boost, and the Aussie had followed it."

The market had been anticipating a downgrade to Spain's BAA3 status, but it remained solid after the ratings agency conducted a review of the country's credit score. There were also reports overnight that Spain could apply for bailout funds in the near term, with two German MPs saying that Germany would agree to an application for a precautionary credit line from the European Stability Mechanism (ESM).

US housing numbers and Chinese gross domestic product (GDP) would be the next data of significance for the markets, Mr Capurso said.

US housing starts and permits are due to be released on Wednesday (US time), while Chinese GDP will come out on Thursday.

Meanwhile, Australian bond futures prices are lower. At 12pm AEDT today, the December 10-year bond futures contract was trading at 96.950 (implying a yield of 3.050 per cent), down from 97.070 (2.930 per cent) at yesterday's close. The three-year bond futures contract was at 97.530 (2.470 per cent), down from 97.630 (2.370 per cent).