The Australian dollar has lifted almost one US cent, on the back of optimistic business data from Germany, and commentary from the Australian reserve bank.
At 1200 AEDT on Friday, the Australian dollar was trading at 107.46 US cents, up from 106.47 cents on Thursday.
RBC currency strategist Michael Turner said optimistic comments from Reserve Bank of Australia (RBA) governor Glenn Stevens had kept the local currency buoyant.
“He seems fairly relaxed about the outlook,” Mr Turner said.
“He’s reiterated that growth is around trend and inflation is within targets, so the RBA’s comfortable with rates where they are.”
Mr Stevens, addressing a House of Representatives Standing Committee on Economics on Friday, said the cash rate would likely remain steady at 4.25 per cent, despite the major banks’ decision to raise interest rates.
Mr Turner said the local currency had performed well overnight with positive data from Germany boosting the market.
“The Ifo survey from Germany last night was very good, and it pushed the euro higher,” he said.
“The dollar just followed that, and now it’s over 107 (US cents).”
The Ifo institute reported that business confidence was up for the fourth month in a row, according to its survey for February.
Mr Turner said the market would be looking ahead to the G20 meeting in Mexico on the weekend, where the euro zone debt crisis would be a key talking point.
“These things tend to disappoint, but on the agenda will definitely be an increase in the IMF’s (International Monetary Fund) lending capacity,” he said.
“There’ve been headlines recently suggesting a bit of friction there, so there should be some communication at the meeting that leaders are ready to ensure stability and growth.”
Meanwhile, Australian bond futures prices were lower.
At 1200 AEDT on Friday, the March 10-year bond futures contract was trading at 95.850 (implying a yield of 4.150 per cent), down from 95.905 (4.095 per cent) on Thursday.
The March three-year bond futures contract was at 96.270 (3.730 per cent), down from 96.340 (3.660 per cent).