Commodities lift dollar

A rise in commodity prices has helped push the Australian dollar back above US103¢. Late on Friday, the local unit was trading at US103.10¢, up from US102.46¢.

CMC Markets foreign exchange dealer Tim Waterer said the currency was benefiting from a rise in commodity prices. We're seeing a pretty good bounce-back by gold this week, and crude oil is up a bit as well and equities have been going along quite well," he said.

"That is sapping some US dollar demand and leaving the door open for the Australian dollar to push above 103¢."

Mr Waterer said the currency had been prevented from rallying further due to growing expectations the Reserve Bank would cut the cash rate in the next few months.

"That is curtailing some buying in the dollar," he said.

Meanwhile, bond futures prices were unchanged after traders sat on the sidelines after the Anzac public holiday. Commonwealth Bank head of debt research Adam Donaldson said it had been one of the quietest trading days of the year. He said the market would spend the next week sizing up the possibility of an interest rate cut in May.

Speculation the Reserve Bank will cut the cash rate, currently at 3 per cent, at its May 7 meeting has increased after official figures this week showed inflation in the middle of the central bank's 2 to 3 per cent target range.

"The market is quite uncertain as to whether the RBA will be firing the trigger at its May meeting," Mr Donaldson said.

The June 10-year bond futures contract was unchanged at 96.850 (implying a yield of 3.150 per cent). The three-year contract was steady at 97.410.