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 5pm eastern daylight time, the Australian dollar was trading at $US0.9208/10, up 0.71 per cent from yesterday's close of $US0.9141/47.
It was the Australian dollar's highest close to the local session since December 4, 2009.
During the day, the local unit traded between $US0.9185 and $US0.9268.
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 today'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 tomorrow'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 $US0.9150 and $US0.9268 during Thursday's offshore session.
Meanwhile the Australian share market closed lower today amid profit taking as weakness in the banking sector offset gains in some of the big energy and resources stocks.
The benchmark S&P/ASX 200 index fell 22.0 points, or 0.45 per cent, to 4,899.4 points, while the broader All Ordinaries index reversed 16.3 points, or 0.33 per cent, to 4,930.5 points.
On the Sydney Futures Exchange, the March share price index futures contract was down 28 points at 4,884 points, on a volume of 17,953 contracts.
Austock Securities senior client adviser Michael Heffernan said the market had taken a pause on Thursday after a steady run upwards.
"A bit of profit-taking, you might say, certainly as far as the banks are concerned," Mr Heffernan said.
"We didn't have a negative lead from overseas on the commodities market, so that was positive."
Among the major banks, National Australia Bank was 22 cents lower at $26.99, Commonwealth Bank dropped 54 cents to $55.44, ANZ reversed 54 cents to $22.12, and Westpac sagged 34 cents to $25.05.
In the resources sector, global miner BHP Billiton eased five cents to $43.77, and Rio Tinto was up 42 cents at $79.00.
Atlas Iron was 10 cents richer at $2.23 after it said it had received strong interest from steel mills in ore from the Wodgina DSO project in Western Australia, amid bullish forecasts for iron ore prices.
Toro Energy was steady at 15 cents after it was granted approval from the West Australian government for a test pit at its Wiluna uranium project in the state's midwest region.
Mineral Resources was 25 cents higher at $7.45 as it increased the cash component of its bid to mop up the remaining stake in Polaris Metals that it does not already own.
Oil and gas producer Woodside Petroleum ascended 50 cents to $48.90, and Santos gave away 17 cents to $14.44.
In the retail sector, Harvey Norman jumped 14 cents to $3.95, Woolworths slipped six cents to $27.85, and Wesfarmers, which owns Coles, shed 50 cents to $30.70.
Data released on Thursday showed that retail sales surged in November.
Telco Telstra decreased six cents to $3.32.
Among media stocks, News Corp was up 16 cents at $17.96, and its non-voting stock put on 13 cents to $15.50.
Consolidated Media lost four cents to $3.00, and Fairfax hovered at $1.745.
In the gold sector, Lihir nudged up one cent to $3.41, Newmont firmed three cents to $5.32, and Newcrest picked up 43 cents at $37.15.
The price of gold in Sydney was $US1133.875 per fine ounce, up $US11.10 on Wednesday's closing price of $US1122.775.
The top-traded stock by volume was drilling services provider Boart Longyear, with 116.49 million shares worth $46.26 million changing hands.
Boart Longyear shares were 1.5 cents lower at 38.5 cents.
National turnover was 2.13 billion shares worth $4.15 billion, with 579 stocks up, 465 down and 366 unchanged.
On Wall Street overnight, the Dow Jones Industrial Average index was up 1.66 points, or 0.02 per cent, at 10,573.68.
Earlier the Australian dollar was US1c higher at noon, boosted by better than expected retail sales figures.
At noon AEDT, the Australian dollar was trading at $US0.9247/49, up from yesterday's close of $US0.9141/47.
During the domestic session, the local unit has traded between $US0.9184 and $US0.9267.
Commonwealth Bank associate economist Sara Hoenig said the local unit climbed 0.4 US cent in the minutes after the Australian Bureau of Statistics (ABS) published retail trade figures for November at 1130 AEDT.
Australian retail trade at current prices rose 1.4 per cent in November to a seasonally adjusted $20.081 billion, from a revised $19.802 billion in October, the ABS said.
The headline figure thrashed the median market expectation for a modest rise of 0.3 per cent in the month.
``It was such an upside surprise, it's driven the Aussie,'' Ms Hoenig said.
``It popped above $US0.9250 which is up about 40 points since the data was released.''
Also during the domestic session, the ABS said the domestic balance of goods and services (BoGS) was a deficit of $1.70 billion in November, seasonally adjusted, from a revised deficit of $2.080 billion in October.
The median market expectation was for a deficit of $1.8 billion.
During the month, exports were down 2.0 per cent in adjusted terms, while imports fell 3.0 per cent.
Ms Hoenig said that, while the headline figure for the BoGS was better than expected, it was overshadowed by the better than expect retail trade data.
She said investors now would turn their attention to US non-farm pay rolls data - a key measure of employment - due during Friday's offshore session.
Meanwhile the Australian share market was flat at noon, with gains among energy and resources companies offset by weakness in financial stocks.
At 1200 AEDT, the benchmark S&P/ASX 200 was down 0.6 point, or 0.01 per cent, at 4920.8 points, while the broader All Ordinaries index had risen 4.3 points, or 0.09 per cent, to 4951.1 points.
On the Sydney Futures Exchange, the March share price index futures contract was down two points at 4910 points, on a volume of 8179 contracts.
The markets opened in positive territory but the S&P/ASX 200 turned negative just before 1200 AEDT.
There were roughly three stocks up for every two that were down.
CMC Markets market analyst David Taylor said higher commodities prices had supported resources stocks in quiet morning trade, following a lacklustre lead from Wall Street.
``I'm not surprised to see a fairly timid start to the day,'' Mr Taylor said.
``The market is just trying to find its feet in the New Year.''
