Dollar soars to 97 US cents as ASX hits five-year high: Midday Roundup

The Australian dollar has soared to 97 US cents overnight, as US payrolls data disappointed.

The dollar peaked at 97.32 US cents in overnight trade, its highest level since June, as non-farms payrolls data showed the US economy had added 148,000 jobs in September, well below the 180,000 new jobs the market was expecting.

This has fuelled expectations that the US Federal Reserve will not reduce its stimulus measures anytime soon, pushing the Australian market to a its highest point since June 2008 in morning trade.

The benchmark S&P/ASX200 index hit 5402.4 points this morning.

Tim Radford, a global analyst at Rivkin, says the bull-run is likely to continue.

“Conditions are setting up for a strong run for equities through the back end of 2013 and in early 2014,” he said. “A likely continuation of accommodative policies by global central banks in their current forms, and another possible rate cut by the RBA, will likely lend plenty of support to Australian equities over the coming months.”

Treasurer Hockey almost doubles Australia’s debt ceiling

Federal Treasurer Joe Hockey has almost doubled Australia’s debt ceiling to $500 billion.

The previous $300 billion limit was due to be breached in coming months. Hockey said he had recently been advised the Australian federal debt is predicted to peak at above $400 billion.

“We have to move quickly to deal with this, particularly in the wake of what has been revealed in the United States in recent weeks,” Hockey said, adding that the need to increase the ceiling was “the legacy of bad Labor government”.

Opposition Treasury spokesman Chris Bowen says the Treasurer has been given “a blank cheque”.

“He’s asking for a very big increase in the debt cap without releasing [any] figures,” Bowen told ABC Radio.

Bowen called on the government to release the mid-year budget figures (MYEFO) as “a matter of urgency” given the size of the debt-limit increase.

Third-quarter inflation beats expectations

Today’s CPI data has beaten expectations, up 1.2% in the third quarter, bringing yearly inflation to 2.2%.

Analysts had expected inflation of just 08% this quarter.

The dollar pulled even higher on the release at 11.30am this morning, as high inflation reduces the chances of a rate cut.

The RBA aims to have yearly inflation within its 2% to 3% target band.

In the third quarter, the price of vegetables fell 4.5%. However, this was offset by significant price rises in automotive fuel (up 7.6%), international travel bookings (6.1%), electricity (4.4%), property rates and charges (7.9%), water and sewage (9.9%), and domestic travel and accommodation (3.5%).


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