economic news - a$ at six year high

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    from ABC Online

    The US dollar has come under renewed selling pressure despite more encouraging reports on the American economy.

    At the same time, gold has jumped above $US400 an ounce and the Australian dollar has hit a new six-year high, reaching 72.88 US cents.

    At around 8:20am AEDT, it was only just below that at 72.75 US cents, up 0.3 cents on yesterday's local close.

    On the cross-rates, it was at 60.75 euros, 79.56 Japanese yen, 42.32 pence sterling, and $NZ1.29.

    The further rise in the value of the local dollar will put added pressure on Australian exporters, and comes on the day the Reserve Bank board meets to decide on interest rate settings.

    Board members will also be mindful of the recovery prospects for the US economy.

    And overnight in America, the Institute for Supply Management said its key measure of manufacturing activity had surged almost six points to 62.8 in November.

    It means US factories are working at their fastest rate since 1983.

    Earlier, figures out of Washington showed US construction spending was up an unexpectedly strong 0.9 per cent in October.

    On equity markets the economic data have underpinned a solid rally.

    On the New York Stock Exchange, the Dow Jones industrial average has closed up 117 points to 9,899.

    That is a rise of 1.2 per cent.

    High-tech shares on the Nasdaq market are also comfortably ahead.

    The Nasdaq composite index has added 16 points to 1,977.

    The British sharemarket has closed at its highest level in more than a year, with UK investors impressed by the American economic figures.

    London's FT100 index has closed 67 points higher at 4,410 - a gain of more than 1.5 per cent.

    In Australia yesterday, the market lost ground, going into "interest rate watch".

    The strength of the dollar might also have been affecting sentiment.

    The All Ordinaries index fell 15 points to 3,180.

    In overnight trade on the Sydney futures exchange the share price index 200 contract has closed up 11 points on yesterday's day settlement at 3,195.

    The 10-year bond contract was down three points at 93.97 with the implied yield rising to 6.03 per cent.

    The gold price has risen to $US403.40 an ounce, with West Texas crude oil at $US29.92 a barrel.

    Dave R.
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