Dollar closes flat after busy week

THE dollar closed flat today, as investors cooled their heels following a heady week of trade which saw the unit gain more than two US cents to close above 92 US cents. At 5pm AEDT, the dollar was trading at 92.25 US cents, up a fraction from Thursday's close of 92.23 cents.

During the domestic session, the local currency moved between 92.04 US cents and 92.70 cents, the latter the Australian dollar's highest point since it reached $US0.9300 in early August last year.

The unit started this week at 90.34 US cents.

But with no significant economic data published during today's domestic session, the unit locked into step with the Australian stock market, said Nomura Australia chief economist Stephen Roberts.

"And if you look at the Australian stock market too, it's having a pause," he said.

"There's not been a lot more news in our time zone and I think it's just waiting to see what happens over the weekend, what's happening with the US earnings season and what that might mean for risk assets."

The local stock market closed a little lower today.

At the 4:15pm AEDT close the benchmark S&P/ASX200 index was down 0.48 per cent at 4836.4 points, while the broader All Ordinaries index lost 0.41 per cent to 4842.6 points.

Mr Roberts said the underpinnings for the local unit were firm, and he didn't expect the unit to dip below 92 US cents over the weekend.

The unit has become more attractive to investors in recent weeks after the Reserve Bank of Australia (RBA) took the cash rate up 25 basis points to 3.25.

Even before the central bank's October 6 decision to raise rates, Australia had one of the highest cash interest rates of its G20 partner-nations.

At 5pm AEDT, the dollar was trading at 83.87 Japanese yen, up from yesterday's close at 82.47 yen, and at 61.83 euro cents, up from 61.64 euro cents previously.

The euro finished at 1.4920 US dollars, down from yesterday's close of 1.4963 US dollars, and at 135.68 Japanese yen, up from 133.78 previously.

The US dollar ended the local session at 90.94 Japanese yen, up from 89.41 yen previously.
Meanwhile, the Australian bond market closed weaker.

At 4:30pm AEDT, the yield on the Commonwealth Government March 2019 bond was at 5.585 per cent, up from yesterday's close of 5.579 per cent, while the yield on the April 2012 bond was at 5.198 per cent, up from 5.156 per cent previously.

On the Sydney Futures Exchange, the December 10-year bond futures contract price was at 94.355, down from yesterday's close of 94.360, while the December three-year bond futures contract was at 94.640, down from 94.680 previously.

Commonwealth Bank interest rate strategist Jarrod Kerr said a speech by RBA governor Glenn Stevens yesterday boosted expectations of a more aggressive tightening cycle of monetary policy.

Mr Kerr said financial markets were pricing in more rises to the overnight cash rate over the next few months by the RBA.

"A 50 basis point move is very much on the cards (in November) and then we will be thinking what will happen in December," Mr Kerr said.

The 90-day bank bill rate closed at 3.920 per cent, up on yesterday's close of 3.900 per cent, while the 180-day bank bill rate closed at 4.310 per cent, up from 4.290 per cent previously.

At 4:30pm AEDT, the RBA's trade weighted index (TWI) was at 70.9, up from yesterday's close of 70.6.

It was the TWI's highest close since August 1, 2008, when it finished at 71.7.





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