Australian dollar slides

The Australian dollar has fallen Friday, buying 71.25 US cents from 71.61 US cents on Thursday.

Yesterday, the local currency flatlined near a six-week peak as losses on Asian share markets chilled risk sentiment somewhat.

The Aussie eased back a touch to 71.57 US cents, having run into stiff resistance around 71.75 US cents overnight.

It was still ahead for the week but needs to break the February top of 72.07 US cents to keep the rally going.

The Aussie had edged higher overnight after a surprisingly soft reading on US core inflation pushed Treasury yields and the US dollar lower.

The Aussie was still supported by an unwinding of expectations for a near-term cut in interest rates.

Doves had been disappointed on Wednesday when Reserve Bank of Australia Deputy Governor Guy Debelle stopped well short of expressing any easing bias, instead saying it would take time to see how the economy evolved.

“These comments leave us thinking that the RBA is open to cutting the cash rate, but it is in no rush and is willing to sit back, perhaps for several months, to see how global developments unfold and how the tensions in the local signals are resolved,” said Nomura analyst Andrew Ticehurst.

Futures have priced out almost any chance of a rate cut at the next policy meeting in May, while the probability of a move in July dropped to 44 per cent from 64 per cent.

Over in New Zealand, markets continue to price in a significant chance of a rate cut, given the country’s central bank shifted to a clear easing bias last month.

Australian government bond futures were quiet on Thursday, with the three-year bond contract flat at 98.6000.

The 10-year contract rose 1.5 ticks to 98.1350.

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