Dollar up on strong data, RBA forecasts

THE dollar is higher on the back of strong economic data and expectations that RBA will leave the cash rate on hold.

The Reserve Bank of Australia meets today for its monthly board meeting and interest rate decision. (AAP Image/Julian Smith)

THE Australian dollar is higher on the back of strong economic data and expectations that the Reserve Bank will leave the cash rate on hold.

At 12pm AEDT today, the local unit was trading at 95.15 US cents, up from 94.88 cents yesterday.

Data released by the Australian Bureau of Statistics yesterday showed retail spending rose 0.8 per cent in September, beating economists' expectations of a 0.4 per cent rise.

Capital city house prices rose 1.9 per cent in the September quarter and 7.6 per cent in the year to September.

The data, along with expectations that the cash rate will remain at 2.5 per cent when the Reserve Bank of Australia (RBA) board meets today, have helped push the Australian dollar higher, CMC Markets chief market analyst Ric Spooner said.

"The Reserve Bank is unlikely to change rates. That's the assumption the currency market is operating on," Mr Spooner said.

"It's also likely, I suspect, there won't be much in the governor's statement ... There may not be a lot to go on today.

"I think the market is assuming the RBA will maintain its basic attitude of not creating any expectations of any imminent change in rates and they're encouraged into that view by the strong data."

Meanwhile, bond futures prices were lower.

At 12pm AEDT, the December 10-year bond futures contract was trading at 95.890 (implying a yield of 4.110 per cent), down from 95.905 (4.095 per cent) today.

The December three-year bond futures contract was at 96.810 (3.190 per cent), down from 96.840 (3.160 per cent).

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