Aussie dollar closes high

SYDNEY - The Australian dollar closed at a one-month high as weaker-than-expected US data pared back expectations of American rate hikes and lowered the US dollar.

At 1700 AEDT, the Australian dollar was trading at US$0.9208/10, up 0.71 per cent from Wednesday's close of US$0.9141/47.

It was the Australian dollar's highest close to the local session since December 4, 2009.

During the day, the local unit traded between US$0.9185 and US$0.9268.

RBC Capital Markets senior currency strategist Sue Trinh said soft economic data in the US weakened the American currency.

The ADP employment said 84,000 jobs were cut in December, which was greater than the market forecast of 75,000.

"We had weak US data and that saw the US dollar give up gains right across the board," Ms Trinh said.

Ms Trinh said financial markets latched onto comments in the minutes from the US Federal Open Market Committee's (FOMC) meeting on December 15-16 that the central bank may keep its key interest rate low for an "extended period".

Also, the Fed was considering its asset purchases and increasing stimulus if need be, Ms Trinh said.

The FOMC left the US federal funds rate in a target range of zero to 0.25 per cent.

"Markets took that poorly and started paring back expectations of Fed rate hikes," she said.

"That weighed further on the US dollar after the release of those minutes."

Stronger-than-expected retail sales in Australia lifted the local currency a boost to its intra-day high, but the domestic unit lost those gains as the afternoon progressed, Ms Trinh said.

"It is pretty much what where it was before the retail numbers," she said.

Economic data due in the US during Thursday's offshore session (AEDT) include initial jobless claims for week ending January 2.

The market median forecast is for 445,000 claims for first time job benefits, up from 432,000 the previous week.

Ms Trinh said financial markets would be subdued ahead of the release of a key employment report in the US during Friday's offshore trade (AEDT).

US non-farm payrolls fell by 11,000 in November, the smallest amount of job losses since the start of the US recession in December 2007.

"There is going to be more consolidation as the market tips into a bit of a malaise in the 24 hours period ahead of non-farm payrolls," she said.

"I don't expect any sharp gains, down or up, before we see that figure."

She forecasts the Australian dollar to trade between US$0.9150 and US$0.9268 during Thursday's offshore session.

CURRENCY TABLE:
Currency snapshot at 1700 AEDT

AUD/USD 0.9208-10 0.9141-47
AUD/JPY 84.88-89 84.15-19
AUD/EUR 0.6396-02 0.6365-71
AUD/NZD 1.2486-92 1.2454-64
AUD/GBP 0.5763-69 0.5724-29
EUR/USD 1.4390-92 1.4355-59
USD/JPY 92.17-21 92.05-07
EUR/JPY 132.65-69 132.15-18


- AAP