Dollar near US74c in late trade

Oil prices are putting a floor under the local unit, as the market eyes US jobs data.

Rising oil prices are providing a floor for the Australia dollar.

The Australian dollar was little changed in late trade, ahead of the US jobs data.

At 5pm (AEDT) the local unit was trading at US74.06 cents, down from US74.17c on Thursday.

The US government will offer a snapshot of the US labour market, the final such report before Federal Reserve officials meet December 13-14 to decide on the next step for interest rates.

The US Federal Reserve is widely expected to raise its benchmark rate for the first time in a year amid signs of a tightening labor market and continued economic growth.

For the November US jobs report, economists surveyed by The Wall Street Journal forecast a net gain of 180,000 for non farm payrolls and an unemployment rate at 4.9 per cent.

“There’s been very limited action as we head into the Non-Farm Payroll announcement,” said Stephen Innes, senior currency trader at OANDA Australia and Asia Pacific.

The focus remains on rising oil prices, which is providing an updraft to the commodity bloc of currencies. This is also providing a floor for the Australia dollar, Mr Innes said.

Earlier, Australian retail sales data showed strength led by food and household goods sales in October. Retail sales rose 0.5 per cent from a month earlier, the Australian Bureau of Statistics said, compared with a 0.3 per cent rise expected by economists. It was the third straight month of solid gains.

The strength comes despite record-low wages growth and signs of a softer job market, with hiring in 2016 heavily weighted toward part-time positions.

Still, consumer and business confidence levels remain relatively upbeat, despite the global uncertainty posed by Britain’s decision to leave the European Union and the US presidential election.

Next week will bring third quarter GDP growth data, and a central bank policy meeting.

In what is likely to be the most relaxed Reserve Bank of Australia’s board meeting of the year, Citigroup’s chief economist Paul Brennan said he expects RBA Governor Philip Lowe and the central bank’s board to come to the easy decision to keep the cash rate target unchanged at 1.50 per cent on Tuesday.

The RBA will retain the guidance that “holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time,” he added.

Governor Lowe is likely to take the advice of former Governor Glenn Stevens and “chill-out” for at least a few months over the Australian summer, he added.

More drama might surround the release of GDP data on Wednesday.

ANZ said its preliminary estimate for GDP growth is for flat on-quarter growth. Some economists are forecasting a contraction. This result would follow a solid 0.5 per cent on-quarter rise in the second quarter and would see annual growth drop to 2.3 per cent from 3.3 per cent, it said.

That would be well below the RBA’s implied forecasts of approximately 3 per cent, it adds.

“The weakness in GDP looks to be quite broadly based, although business investment looks to have been particularly weak, taking around 0.6 percentage points off GDP growth in the quarter,” ANZ added.

“Some slowdown in GDP growth would not be surprising given the apparent loss of momentum in the labor market, but we are surprised by the extent of the weakness evident in these preliminary numbers,” it said in a research note.

Dow Jones, with AAP