Dollar dips as investors take profits
Late on Friday, the dollar was trading at US96.05¢, down from US96.66¢ on Thursday, after dipping briefly below US96¢.
"The market is very neutral now," Easy Forex currency dealer Tony Darvall said. "No one is really sure what direction we're about to go here but you don't really want to get caught short going into the weekend or excessively long either.
"This looks exactly like profit taking, and sometimes profit taking can change the market's direction."
Bond futures prices staged a surprise rally.
Reserve Bank deputy governor Philip Lowe on Thursday said non-mining investment was almost at the levels of the 1990s recession. But a falling dollar, low interest rates and improving business confidence should turn things around, he added.
Such comments would normally weaken bonds, UBS interest rate strategist Andrew Lilley said.
"The bond market was in a rally mode for most of the day which is a little bit surprising coming off the back of the relatively upbeat assessment from the deputy governor," Mr Lilley said.
"It's strange because it looks like the RBA is more positive about the growth outlook and we just found out that there's going to be a heck of lot more bonds than we thought there'd be a week ago.
"It seems like people aren't convinced necessarily that any serious change is going to be coming from the RBA."
The December 10-year bond futures contract was trading at 96.065 (implying a yield of 3.935 per cent), up from 96.050 (3.950 per cent) on Thursday. The three-year contract was at 96.970 (3.030 per cent), up from 96.950 (3.050 per cent).
AAP
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The Australian dollar dipped as investors took profits following a week of strong gains. This profit-taking led to a decrease in the dollar's value as the week came to a close.
Late on Friday, the Australian dollar was trading at US96.05¢, down from US96.66¢ on Thursday, after briefly dipping below US96¢.
Profit-taking can sometimes change the market's direction. When investors sell off assets to lock in gains, it can lead to a shift in market trends, as seen with the recent dip in the Australian dollar.
Bond futures prices staged a surprise rally, which was unexpected given the relatively upbeat assessment from the Reserve Bank's deputy governor about the growth outlook.
Philip Lowe mentioned that non-mining investment was almost at the levels seen during the 1990s recession. However, he expressed optimism that a falling dollar, low interest rates, and improving business confidence should help turn things around.
The bond market rally was surprising because it occurred despite the Reserve Bank's positive outlook on growth and the expectation of more bonds being available than previously thought.
The December 10-year bond futures contract was trading at 96.065, implying a yield of 3.935%, up from 96.050 (3.950%) on Thursday. The three-year contract was at 96.970 (3.030%), up from 96.950 (3.050%).
It seems that investors are not necessarily convinced that any serious changes will be coming from the Reserve Bank of Australia, despite the positive growth outlook shared by the deputy governor.
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