The US stockmarket gained ground overnight, consolidating the highs from the previous session. Upbeat US house price data supported sentiment, although a fall in consumer sentiment saw some earlier gains retrace.
The Dow was unchanged, the S&P 500 rose 0.1%, and the Nasdaq was up 0.6% for the session.
US government bonds rose at the long end (yields fell) on solid demand at the Treasury US$35bn five-year note auction.
This comes ahead of a sale of US$29bn in seven-year notes tonight. US 10-year government bond yields initially rose to 2.73%, but fell following the softer consumer confidence data and given solid demand at the note auction.
Australian three-year government bond yields (implied by futures) fell to a one-month low of 3.05%, while the 10-year yield fell from 4.19% to 4.14%.
The Aussie dollar softened further, versus the US dollar and the other major currencies.
The Aussie dipped to a three-month low under 91 US cents, before partially rebounding to trade around 91.30 US cents at the time of writing.
Comments from RBA Deputy Governor Lowe moderated expectations of currency intervention by the RBA, with Lowe saying the threshold for intervention was "fairly high".
This initially saw the Aussie edge higher yesterday morning, although those gains were not sustained overnight, with investors possibly reassessing the likelihood of a rate cut from the RBA.
Despite its gains against the Aussie dollar, the US dollar was broadly weaker versus the major currencies, with the US dollar index jumping following the upbeat house price data, only to retrace those gains and run further on the downside following the release of the softer consumer sentiment data.
The Euro gained against the US dollar and the Aussie dollar as investors cooled expectations of further monetary stimulus from the ECB.
Also supportive were comments from China's central bank governor that the Euro was important to China's reserve management and comments from ECB Board member Coeure that he doesn't expect disinflation to deepen.
The copper price declined after soft US consumer confidence data raised concerns about demand for copper.
Yesterday, RBA Deputy Governor Lowe spoke on the challenges facing the Australian economy, given the terms of trade is no longer expected to rise, and the working age population is set to decline.
These two factors have been the major sources of income growth over the past decade, and highlight the need for productivity to increase to sustain similar growth in incomes.
While Lowe referred to many ideas to boost productivity, he focused on infrastructure investment, in particular within transport.
In the Q&A, Lowe again reiterated some possibility for intervention in currency markets, although the threshold for intervention was "fairly high". Lowe also expressed an expectation for the AUD to weaken.
On the housing market, he said that there was "no housing bubble" and that we "should not be afraid of house prices rising".
The Portuguese 2014 budget was passed by parliament and an increase in public sector hours was allowed by Constitutional Court (the latter necessary for the Budget to deliver a 4% of GDP deficit, required if Portugal is to exit its bailout and regain access to financial markets in mid-2014).
US house prices accelerated to 13.3% in the year to September, from 12.8% in the year to August, the fastest in more than seven years, according to the S&P-CS 20 city index.
The separate FHFA house price index recorded 8.5% growth in the year to September.
Housing permits rose 6.2% in October after a 5.2% September gain. The single family house data rose 0.8% in October after falling 1.9% in September; multiples rose 20% in September and 15% in October, explaining most of the apparent strength, which is likely temporary.
US consumer confidence fell from 71.2 to a seven-month low of 70.4 in November, confounding consensus expectations for an increase in consumer confidence.
It was the fourth decline in five months, reversing just over half of the 20 point surge in the Conference Board index between March and June.
The present situation index slipped 0.6 points in November despite renewed improvement in consumers' assessment of the labour market; expectations were down 2.9 points this month.
The Richmond Fed factory index rebounded from 1 to 13 in November, reversing most of September's plunge from 14 to 0. Shipments rose 18 points, orders were up 15 points but jobs rose just 2 points.
Update your news preferences and get the latest news delivered to your inbox.