FOREIGN EXCHANGE (against previous Sydney close) 0.6446/51 (0.6471/74)1.1703/25 (1.1697/24) 62.20/26 (62.99/05) 96.49/55 (97.34/36) 0.5110/15 (0.5148/52) 1.2613/17 (1.2567/71)
DEBT FUTURES CASH YIELDS
90-DAY BILL (DEC) 95.650(-0.050) 4.62(4.60)
3-YR BOND (DEC) 96.170(-0.040) 3.82(3.84)
10-YR BOND (DEC) 95.020(-0.005) 4.97(4.95)
3/10 SPREAD +1.150 (+1.170) AUST/US 10-YR SPREAD +131(+122)
S&P/ASX 200 3610.7 (3654.6) US10-YR 3.65(3.73)
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DATA: Merchandise imports rose 5 pct to A$21.91 billion in
October. Imports on a balance of payments basis rose by 1
percent, with oil up again as the local dollar fell sharply.
_______________________________________________________________
* The Australian dollar eased further on Tuesday as dovish
comments from the country's central bank were taken as leaving
the door open for further sharp cuts in interest rates.
* Minutes of the Reserve Bank of Australia's (RBA) November
meeting showed it was increasingly worried about the impact that
a deteriorating global outlook and the destruction of household
wealth were having on business and consumer confidence.
* The economic outlook dimmed so rapidly that the board chose
to cut by 75 basis points to 5.25 percent when the initial
recommendation just a few days earlier was for a 50 basis-point
move.
* The RBA was also more confident that the economic slowdown
combined with global disinflationary forces would soon see
domestic inflation fall.
* Market still pricing in a cut of at least 75 basis points
at the RBA's December policy meeting and a further easing to
around 3.5 percent by March.
* The minutes also showed the RBA was not intending to defend
a particular level by intervening to buy the Australian dollar,
rather it was adding liquidity when markets became disorderly.
* The Aussie, which had already been under pressure from
falling share prices, dipped to around $0.6445, from $0.6480
before the minutes were released.
* It had bounced from $0.6350/60 support on Monday to reach
as high as $0.6597 before running out of steam as U.S. shares took a late dive.
* The late drop in U.S. equities added to risk aversion and
benefited the safe-haven Japanese yen. The Aussie dipped back to
62.12 yen, from a 64.11 peak on Monday.
* The same focus on safety boosted bonds at first, with
short-term futures reaching record highs, but profit-taking set
in as the day wore on.
* Three-year bond futures eased back 0.050 points to
96.165, while the 10-year contract fell a bare 0.005
points to 95.020.
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