Dollar buoyed by economy, commodities

The Australian dollar closed almost 1.5 US cents firmer, buoyed by positive economic data and strong commodity prices.

At 1700 AEST, the Australian dollar was trading at 80.77 US cents, up from Tuesday's close of 79.31 cents. During the local session, the unit moved between 80.03 US cents and 80.97 cents.

It was also buying 49.5 pence, 57.4 euro cents and 79.2 yen in recent trading.

Nomura Australia economist Stephen Roberts said the local unit was well supported by better-than-expected local economic data and a weakened US dollar.

''It was almost a double whammy,'' he said. ''Because overnight commodity prices were firm, the US dollar was weakened, and today's strong local data, all of those factors were positive for the Australian dollar.''

During Tuesday's offshore trade, the US dollar weakened under improved oil, gold, silver and copper prices.

Benchmark crude for July delivery rose $US1.92 to close at $US70.01 a barrel in trading on the New York Mercantile Exchange, hitting a high so far for 2009 of $US70.18.

Gold for August delivery rose $US2.20 to settle at $US954.70 an ounce, while Silver futures for July delivery rose 18.5 US cents to $US15.14 an ounce in New York.

The domestic currency was well supported after a consumer confidence survey showed optimists outnumbered pessimists for the first time in 17 months.

The Westpac-Melbourne Institute index of consumer sentiment rose 11.3 index points in May to 100.1 points.

A level about 100 indicates more respondents are optimistic about their confidence than pessimistic.

The 12.7 per cent rise was the largest monthly increase in 22 years.

Meanwhile, housing finance commitments for owner-occupied housing rose 0.9 per cent in April, seasonally adjusted, to 60,395, the Australian Bureau of Statistics (ABS) said today.

It was the seventh monthly rise in a row and the highest number of home loan approvals since February 2008.

At 1700 AEST, the local unit was trading at 78.90 Japanese yen, up from Tuesday's close of 77.86 yen, and at 57.40 euro cents, up from 57.00 euro cents.


Meanwhile, The Australian bond market closed weaker.

At 1630 AEST, the yield on the Commonwealth Government March 2019 bond was 5.600 per cent, up from Tuesday's close of 5.553 per cent, while the yield on the April 2012 bond was at 4.417 per cent, up from 4.395 per cent.

On the Sydney Futures Exchange, the June 10-year bond futures contract price was 94.425, down from Tuesday's close of 94.475, while the June three-year bond futures contract was at 95.625, down from 95.650.

The local bond market was under pressure during the morning, after the consumer sentiment data was published.

UBS senior economist Matthew Johnson said the strong data reduced the prospect of further interest rate cuts from the Reserve Bank of Australia (RBA).

The 90-day bank bill rate closed at 3.247 per cent, down from Tuesday's close of 3.253 per cent, while the 180-day bank bill rate was at 3.293 per cent, down from 3.310 per cent.

At 1600 AEST, the Reserve Bank of Australia's trade weighted index (TWI) was at 64.6, up from Tuesday's close of 63.5.

AAP