Steady outlook, with a downward bias

The Australian dollar edged higher on Friday despite weak Chinese economic growth figures continue to weigh on the currency.

The Australian dollar edged higher on Friday despite weak Chinese economic growth figures continue to weigh on the currency.

Late in the session, the dollar was trading at US103.43¢, up from US103.17¢ on Thursday.

"The softness in commodity prices is acting as a strong offset to the impact of monetary printing in the US and Japan on the Australian dollar," said AMP Capital chief economist Shane Oliver.

"As a result the Australian dollar looks like remaining range bound, but with a bit of a downwards bias into mid-year if shares and commodities continue to correct."

Global sharemarkets fell for most of the week after China released weak growth figures and the International Monetary Fund downgraded its global growth forecast.

The key driver for the dollar in the week ahead will be the first quarter inflation data, due on Wednesday.

In the Reserve Bank board minutes for April released this week, the central bank noted interest rate-sensitive parts of the economy were responding to previous rate cuts.

Meanwhile, bond futures were little changed despite signs money is starting to flow into the local market from Japan following recently announced stimulus measures.

Nomura head of fixed income Jon Linton said local bond futures traded in a narrow range during Friday's local session.

"It's been very quiet, the market hasn't really moved," he said.

Mr Linton said money had begun flowing in from Japan for the first time since the Bank of Japan announced stimulus measures this month. He said the highly anticipated move had been slow to materialise following the bank's April 4 announcement it would spent 7 trillion yen ($70 billion) a month on Japanese government bonds in an effort to boost inflation.

"Over the past 24 hours there has been a little bit of buying coming into the market, which there hasn't been since the BoJ's announcement," he said.

The June 10-year bond futures contract was trading at 96.8 (implying a yield of 3.2 per cent), down from 96.81 (3.19 per cent) on Thursday.

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