The Australian dollar held above 52 U.S. cents on Wednesday despite initial disappointment at third quarter capital expenditure data, to stand a quarter cent up on the day and keeping key 52.50 cents resistance in sight.
The Aussie broke above 52.10 cents resistance in offshore trading, touching a high of 52.36 cents, just shy of this month's 52.47 peak, and extending the rally from around 51.45 cents last week.
However, the Aussie dropped back against a firming yen after Standard & Poor's cut Japan's long term rating by one notch to AA when speculation had been for a cut to AA-minus, but the rating agency did leave the country on negative CreditWatch.
At 4:00 p.m. (0500 GMT) the AUD was $0.5224/29 compared with $0.5201/06 late here on Tuesday, while AUD/JPY was 64.50/60 yen versus 64.67/77, although it touched its highest level in nearly five months overnight at around 64.92 yen.
Q3 capex rose just 0.6 percent when expectations had centred on a 2.0 percent rise, although economists said this still puts Australia on track for a solid Q3 GDP outcome next week.
More importantly business investment intentions rose by 6.5 percent in the fourth estimate for 2001/02 over the third estimate.
"This upgrade was pretty much in line with the average experience of the last five years," said Michael Blythe, chief economist at Commonwealth Bank of Australia.
"Some downgrade would have hardly been surprising given the deterioration in the global outlook since the last survey, and given the shock to confidence from the events of September 11," Blythe said.

MSCI UPHEAVAL
The Aussie has recently strengthened on expected investment flows linked to MSCI reweightings at the end of the week, a large interest rate premium, and recent positive comments by the Reserve Bank on the Aussie's long term trend.
Equity markets could see some upheaval on Friday as funds reposition portfolios for the MSCI changes, which could in turn see volatility in currencies.
"Capital flows have become increasingly more important in currency direction and the MSCI is probably the guide to where capital flows are going," John Body, head of global forwards at ANZ Investment Bank
"We see yen and euro as the two major sufferers in the change, the U.S. dollar being a beneficiary and possibly the Australian dollar being neutral to positive," Body said.
The U.S. dollar was under some pressure overnight even before S&P's smaller than expected downgrade of Japan following an unexpected drop in U.S. consumer sentiment.
The Federal Reserve's beige book is released later on Wednesday which may give clues on policy ahead of the Federal Open Market Committee meeting on December 11.