Aussie inches up, with more expected
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).
Frequently Asked Questions about this Article…
The AUD rose after a rally in the Japanese yen helped push the US dollar lower. The article reports the Australian dollar traded around US103.64¢, up from US103.50¢, with market interest focused on yen moves ahead of a G20 finance ministers meeting.
Traders are watching the yen closely because its recent rise weakened the US dollar. The yen's sharp fall in prior months, after Bank of Japan monetary easing, has put it at the center of attention and could be a topic of criticism at the G20 finance ministers meeting in Moscow, influencing broader currency flows that can support the AUD.
Westpac chief currency strategist Robert Rennie said the Australian dollar has been trading in a narrow but well supported range and that he would not be surprised to see it push a bit higher next week, potentially toward US104.50¢.
Bond futures prices moved higher after negative news from Europe and a well subscribed local government debt auction. For investors, higher futures prices in the article were associated with slightly lower implied yields, indicating increased demand for government bonds and a shift toward safer assets.
ANZ's head of interest rate research, Tony Morriss, said the strong bid cover at the local bond tender showed solid demand. That support helped boost bond futures, suggesting recent yield rises made Australian bonds more attractive to investors.
The March 10-year bond futures contract was trading at 96.500, implying a yield of 3.500%, up from 96.430 (3.570%). The three-year contract was at 97.140 (2.860%), up from 97.090 (2.910%).
Eurostat reported the eurozone economy shrank by 0.6% in the final three months of 2012. That disappointing economic data contributed to weakness in European stock markets and helped drive support back into bond markets, lifting bond futures.
Yes. The article highlights that currency shifts, especially involving the yen and US dollar, can quickly affect the AUD, while bond auction demand and eurozone data can move bond futures and yields. Monitoring these signals can help investors understand short-term market sentiment and risk appetite.
Call 1300 880 160
Start a chat
Schedule a call
