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$A higher as US budget impasse remains

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Published on: Thursday, October 03, 2013

by AAP

The Australian dollar remains higher as the US dollar continues to weaken with no end in sight to the US government shutdown.

At 1200 AEST on Thursday, the local unit was trading at 94.03 US cents, up from 93.52 cents on Wednesday.

Since 0700 AEST on Thursday, the Australian dollar traded between 93.67 US cents and 94.05 cents.

Large parts of the US government have been closed for two days after Congress failed to pass budget legislation by the end of the American financial year.

US President Barack Obama and congressional leaders have held their first meeting since the shutdown began, but there are no signs of progress.

CMC Markets sales trader Niall King said the Australian dollar, like most currencies, benefitted from the falling greenback.

"While the vast majority of observers expect a resolution to the US fiscal problems and avoid the unthinkable default, jitters are bound to surface the longer the wrangling persists," he said.

"Looking past this, markets may use any government deal as a bullish launch pad and are likely to be positioning themselves accordingly in the meantime.

"Yesterday's weaker building approvals proved to be only a blip on this week's gains."

Meanwhile, the Australian bond market is slightly firmer.

At 1200 AEST, the December 10-year bond futures contract was trading at 96.105 (implying a yield of 3.895 per cent), up from 96.095 (3.905 per cent) on Wednesday.

The December three-year bond futures contract was at 97.060 (2.940 per cent), level with the previous local close.


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