The Australian dollar is lower against a weakened US dollar and the other major currencies, while market risk sentiment has flipped from upbeat to downbeat when Wall Street opened with no obvious reason.
At 0635 AEST on Friday, the Australian dollar was worth 76.22 US cents, down from 76.47 US cents on Thursday.
Westpac analysts say it is unclear why the market mood changed in the US session.
‘There was no obvious news catalyst, with some attributing further ructions in emerging markets to the mood change. US bond yields fell, and the AUD is lower,’ they said in a morning note.
‘The US 10-year treasury yield initially rose from 2.97 per cent to 2.99 per cent, but then plunged during the London afternoon to 2.88 per cent, finally recovering to 2.94 per cent.
‘Two-year yields similarly spiked down from 2.53 per cent to 2.45 per cent before settling at 2.50 per cent. Fed fund futures were little changed and continued to predict a rate hike on 13 June and another by year end.
‘The US US dollar index is down 0.2 per cent on the day, after extending losses during the London morning and partly recovering during the ‘risk-off’ phase’.
‘Underperformer AUD fell from 0.7660 to 0.7613.’
With no major domestic event risk for the local currency on Friday, no major changes in its trajectory is expected.
‘The reversal in risk sentiment has stalled the AUD rally and it remains inside the 0.7600-0.7700 range.’
The Aussie dollar is also lower against the yen and the euro.
CURRENCY SNAPSHOT AT 0635 AEST ON FRIDAY
One Australian dollar buys:
* 76.22 US cents, from 76.47 on Thursday
* 83.62 Japanese yen, from 84.15 yen
* 64.59 euro cents, from 64.77 euro cents
(*Currency closes taken at 1700 AEST previous local session)