Australian dollar rises

The Australian dollar climbed Thursday and is buying 72.40 US cents, up from 72.19 US cents Wednesday.

The local currency yesterday clung to gains after signs of a possible thaw in Sino-US trade relations prompted a bout of short-covering, though it remained within recent well-worn ranges.

Figures on Australian wage growth showed some pick-up but not enough to alter the outlook for steady rates, while Chinese economic figures were too mixed to provide much direction.

The Aussie held at 72.22 US cents on Wednesday, having bounced from a trough of 71.64 on Tuesday on news of a resumption of trade talks between Beijing and Washington.

“Although an improvement US-China relationship is positive for the Aussie, it remains unable to move back above 73 US cents, reflecting the high degree of market uncertainty at the moment,” said Rodrigo Catril, a senior FX strategist at National Australia Bank.

“From a technical perspective, AUD remains confined to its recent 70.21 US cents to 73.02 US cents range with offshore events the big determinants,” he said.

The latest economic news out of China was a mixed bag with October retail sales missing forecasts but a better performance from industrial output and fixed-asset investment.

Australian data showed wage growth inched up to an annual 2.3 per cent in the third quarter, the fastest pace since 2015 but bang in line with market forecasts.

The pick-up is still painfully slow and did nothing to change expectations the Reserve Bank of Australia (RBA) will keep interest rates steady for months yet.

“While our forecasts incorporate a firmer labour market and continued modest erosion of slack going forward, we struggle to get annual wages growth much above 2.25-2.5 per cent over the next 12-18 months,” said Su-Lin Ong, head of Australian strategy at RBC Capital Markets.

“The data continue to suggest little urgency to start policy normalisation,” she said.

Australian government bond futures firmed in line with Treasuries, partly on wagers the recent sharp slide in oil prices would temper future inflation globally.

The three-year bond contract added one tick to 97.845, while the 10-year contract rose two ticks to 97.2800.

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