The sharemarket has retreated from its five-year highs as the countdown begins for the US Federal Reserve's meeting, after which the central bank is widely expected to start trimming its stimulus program.
The benchmark S&P/ASX 200 dipped 0.4 per cent on Friday, ending five consecutive days of gains, which pushed the index to levels not seen since before the global financial crisis.
For the week, the sharemarket was still up 1.6 per cent, advancing 74.64 points to 5219.63.
ANZ senior economist Felicity Emmett said markets were focused on the Federal Reserve and whether it would begin reeling in its $US85 billion ($92 billion)-a-month stimulus.
Furthermore, she said, despite there being a sharp rally in Australian consumer and business confidence after the federal election, the labour market remained "glum".
"The question remains, however, as to whether this boost to confidence will translate into higher business or consumer spending," she said, adding ANZ job advertisements continued to decline while the jobless rate rate rose to 5.8 per cent in August, compared with 5.7 per cent in July.
The weak jobs data took heat out of the Australian dollar, which hit a three-month high at US93.52¢, before tumbling to US92.42¢ at the close of business on Friday.
"The soft employment report on Thursday took some of the steam out of the Australian dollar," RBS senior currency strategist Greg Gibbs said. "But Australian yields and the Australian dollar have been supported by strong consumer and business confidence this week and further improvement in Chinese economic data suggesting its recovery since mid-year has gained further momentum."
Mr Gibbs expected the momentum to pause, citing the expected tapering of the US Federal Reserve's stimulus and the general decline in global foreign exchange reserves.
"This has removed a key support for the Australian dollar. China is frequently the biggest accumulator of FX reserves. But it appears to be avoiding doing so at the moment."
Despite talk of the Federal Reserve winding back its stimulus intensifying, IG market strategist Stan Shamu said he thought markets were becoming more comfortable with the fact that tapering the stimulus would happen.
"The fact that the global economy is recovering is countering the effect of tapering," he said. "As long as things are improving then what's wrong with it? It's almost positive."
Miners led the market down after falls in the gold price, which headed for its worst week in two months as tensions surrounding a possible US-led military strike on Syria eased. Goldminer Newcrest fell 6 per cent, or 78¢, to $12.02 for the week.
But generally, for the big miners the week was positive. Despite posting hefty losses on Friday, BHP Billiton rose 3 per cent for the week to $36.20, while rival Rio Tinto rose 3.3 per cent to $63.08, joining the broader market on a wave of optimism sparked by positive Chinese data.
Shares in Australia's oldest milk processor, Warrnambool Cheese and Butter, rose 32 per cent, or $1.41, for the week, after Bega Cheese launched a takeover bid of $2 cash plus 1.2 Bega shares for every WCB share. Bega shares rose 4.4 per cent to $3.30 for the week.
Despite a 1 per cent rally on Friday, shares in blood products and vaccines supplier CSL, finished the week down 1.4 per cent to $65.90.
It revealed in its annual report on Friday that former boss Brian McNamee had walked away from the top job this year with pay and entitlements worth almost $20 million.