SYDNEY (Dow Jones)--The Australian dollar pushed towards its highest levels of the week Friday as an upbeat U.S. jobs report from payroll giant ADP lifted riskier currencies.
The Australian dollar was further helped by news the European Central Bank will waive minimum ratings requirements to accept Portuguese debt as collateral. These developments, however, were equally detrimental to both ends of the Australian bond curve.
As the U.S. dollar pushed lower in Asian trade, the central banks of South Korea and the Philippines were both seen entering the foreign exchange market. Still, that buying did little to keep the Australian dollar from gaining as the ADP report has caused expectations to improve ahead of Friday's key nonfarm payrolls report for the U.S.
"The market seems set for a positive number. If the reaction to ADP was any guide, a strong number will likely manifest itself as bullish for risk and hence keep the USD on the back foot," said Michael Turner, a strategist with RBC Capital Markets in Sydney.
At 0630 GMT, the Australian dollar was at US$1.0781, up from US$1.0735 late Thursday and up from US$1.0699 before a strong local jobs report in Australia on Thursday. Against the Japanese yen, the Australian dollar was at Y87.64, up from Y86.895.
Still, some in the market said not to expect a big Australian dollar move on the U.S. payrolls report, noting the currency's recent strength in the face of rising European concerns last month means that even a disappointing number wouldn't be likely to trigger a sell-off.
"The risk at this point is it doesn't meet expectations. But while I want to sell the Aussie, and normal indicators suggest the gains are overdone, it's technically not giving me any reason to sell," said a Brisbane-based trader, noting resistance at US$1.0800.
Besides the global trends, bond traders remained focused on the statement early in the week from Australia's central bank, which had economists continuing to downgrade their views on the economy and the prospect for rate rises.
Australia & New Zealand Bank, for one, said core inflation is likely to rise at a trajectory that may be a little more gradual than previously expected, with the bank pushing out its forecast for the next cash rate rise until February 2012.
"We also now expect a slower tightening cycle, with the cash rate forecast to reach 5.75% in the second half of 2013," said ANZ economists.
--By Geoffrey Rogow, Dow Jones Newswires; +61-2-8272-4686; geoffrey.rogow@dowjones.com
