Wednesday, March 29, 2023
HomecurrenciesAustralian dollar heads for hefty weekly gains

Australian dollar heads for hefty weekly gains

The Australian dollar held near recent highs on Friday after the central bank raised its forecasts for economic growth and inflation, putting the currency on track for the largest weekly gain since September.

The Aussie cooled off slightly to $0.8938 after trading at $0.8964 in early deals, but was not far off a four-week peak of $0.8981 touched Thursday.

(Read more: Australia stocks no longerexpensive: Goldman)

It has gained around 2.1 percent so far this week after the Reserve Bank of Australia (RBA) dropped its easing bias and scaled back its verbal rhetoric for a lower currency.

Earlier in the session, the Aussie briefly edged higher after the release of the RBA's quarterly monetary policy report. The central bank again reiterated that rates were likely to remain steady for a while as stimulatory policy and a weaker local dollar were working to support the economy.

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"Initially, the Aussie rose in a logical reaction," said Sean Callow, a senior rate strategist at Westpac.

"But since then there has been a pull back that gives the impression that there is a lot of short-term money flushing around at the moment and perhaps closing out on Aussie long positions ahead of U.S. payrolls," he added.

(Read more: Is the worst over forthe Aussie dollar?)

Non-farm payrolls data is due later on Friday and there is much uncertainty about what it will show given weakness in December, bad weather and an end to long-term jobless benefits.

Callow said a strong number could knock back the Aussie to the high 88 cents area, while a very weak figure could send it past 90 cents.

So far, the Aussie has been unable to sustain above a key chart barrier of $0.8988. Next resistance would target $0.9087, the January peak, while immediate support was seen at $0.8940.


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