Aussie inches up, with more expected
The Australian dollar continued its move higher after a rally in the yen helped push the US dollar lower.
The dollar was trading at US103.64¢ late on Friday, up from US103.50¢ on Thursday.
Westpac chief currency strategist Robert Rennie said the dollar traded in a narrow range but remained well supported: "We've spent the last two or three trading sessions looking like we're set to trade a bit higher."
He said the main focus for markets was the yen, which had moved higher and helped push the US dollar lower in view of a meeting of G20 finance ministers in Moscow.
"It's more about the yen and that is where the interest is at," Mr Rennie said. The yen has fallen sharply in value in recent months following monetary easing by the Bank of Japan, and markets expect the lower value to be the subject of criticism at the G20 meeting.
Mr Rennie said the dollar was likely to continue to move higher early next week.
"I wouldn't be surprised to see us pushing a bit higher next week, towards US104.50¢," he said.
Meanwhile, bond futures prices were higher following negative news from Europe and a well subscribed local debt auction.
The ANZ's head of interest rate research, Tony Morriss, said bond futures moved higher overnight amid weakness in European stock markets and disappointing economic data from the eurozone.
"We have seen a little bit of support come back into bond markets over the last day," he said.
Eurostat, the EU's statistics office, said the eurozone economy shrank by 0.6 per cent in the final three months of 2012.
Mr Morriss said solid demand for an auction of Australian government debt on Friday also helped boost demand for bond futures.
"We had a bond tender here and they saw a particularly strong bid-cover, so that suggests that this recent move higher in yield has made our bonds more attractive for investors," Mr Morriss said.
The March 10-year bond futures contract was trading at 96.500 (implying a yield of 3.500 per cent), up from 96.430 (3.570 per cent). The three-year contract was at 97.140 (2.860 per cent), up from 97.090 (2.910 per cent).