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Australian dollar lifts 1% for week
Published 1:18 PM, 13 Mar 2010
QUICK SUMMARY | FULL STORY | AUS DOLLAR
By a staff reporter, with AAP
The Australian dollar has closed the week one per cent higher, after hitting a six week high early in the week, buoyed by positive economic data and the coking coal pricing structure deal struck by BHP Billiton Ltd.
For the week, the Australian dollar closed 0.99 per cent stronger at $US0.916, compared to last week's close of $US0.907.
During the week, the domestic currency traded between $US0.898, and $US0.920.
AMP Capital Investors chief economist Shane Oliver said the ride for commodity prices and the Australian dollar was likely to remain bumpy, but further gains are still likely this year as global economic growth will remain commodity intensive.
"With commodity prices likely to remain strong and the spread between Australian and US interest rates likely to widen further its only a matter of time before the Australian dollar breaches parity against the US dollar," Mr Oliver said.
The local unit hit a six week high hit earlier in the week as investors sought risk assets following BHP Billiton Ltd's announcement of a new coking coal pricing structure and better than expected US jobs numbers.
Together with the 40 to 80 per cent price increases that iron ore miners are expected to win for their contracts this year, the changes mean the Australian dollar could get a second wind, according to RBS analyst Greg Gibbs.
"The Reserve Bank of Australia has highlighted that companies in Australia are gearing up for a long period of growth in the resources sector and this will continue to underpin a relatively rapid rate of growth in the Australian economy," said Mr Gibbs.
The dollar was also boosted by news that US employment fell by 36,000 in February, surprising most analysts who projected 67,000 job losses because of snow storms that crippled the country's north-eastern region.
The ANZ job ads series found the total number of job advertisements placed in major metropolitan newspapers and on the internet was up 19.1 per cent at 159,778 in February, lending support to the local currency.
Separately, the National Australia Bank business confidence index gained four points to plus 19 points in February, a three-month high.
On Wednesday, the Westpac-Melbourne Institute consumer sentiment index showed a rise 0.3 index points in March to 117.3 points, an increase of 0.2 per cent, further boosting the dollar.
The Australian dollar reached a 13-year high of 67.15 euro cents on Friday, while debate rages over how the European union should deal with Greece's sovereign debt, which stands at 113.4 per cent of gross domestic product.
The local unit slowed mid week after disappointing data on housing finance and mixed employment figures.
Australian housing finance commitments for owner-occupied housing fell 7.9 per cent in January, seasonally adjusted, to 51,056, the Australian Bureau of Statistics said.
Economists expected the number of owner-occupier housing finance commitments to have risen by 2.0 per cent in January.
The unemployment rate was a seasonally adjusted 5.3 per cent in February, compared with a downwardly revised 5.2 per cent in January, the Australian Bureau of Statistics (ABS) said on Thursday.
The mixed employment figures indicated the central bank would keep interest rates on hold in April.
That data was expected to show employment to have risen by 10,000 in February, an unemployment rate of 5.4 per cent and a participation rate of 65.3 per cent, the median of 11 economists surveyed by AAP showed
The Reserve Bank of Australia (RBA) lifted its cash rate by 25 basis points to 4 per cent last week, its fourth move since October, as the economy continued to surprise with its strength.
Investors are pricing in further tightening toward 5 per cent by year-end, easily the most aggressive outlook for interest rates in any developed nation.
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