Aussie dollar closes marginally higher

THE Australian dollar closed marginally higher today as market players stayed on the sidelines ahead of a key US employment report.

THE Australian dollar closed marginally higher today as market players stayed on the sidelines ahead of a key US employment report.

At 5pm (AEST), the Australian dollar was trading at 107.77 US cents, up from 107.51 US cents yesterday.

During the day, the local unit moved between 107.59 US cents and 107.87 US cents amid quiet trading conditions.

The Australian dollar opened at 107.77 US cents at 7am (AEST), benefiting from positive commentary from European Central Bank president Jean-Claude Trichet that eased fears about European sovereign debt.

St George Bank economist Janu Chan said a lack of domestic influences as well as resistance at 107.8 US cents kept the local unit within a narrow range.

"There hasn't been any data domestically or even from overseas to really move the Australian dollar,'' she said.

"I do suspect that financial markets are eagerly awaiting the non-farm payrolls report (from the US).''

Economists expect the report to show the world's largest economy added 105,000 jobs in June, with the US unemployment rate tipped to print at 9.1 per cent.

CMC Markets senior FX dealer Tim Waterer said the Australian dollar ended the week close to 108 US cents despite eurozone ratings downgrades, Chinese local government debt issues and a ``dovish'' statement from the Reserve Bank of Australia.

Having weathered the bad news, the Australian dollar was "well-placed to make hay when better economic data emerged from the US'', Mr Waterer said.

At 5pm (AEST), the Australian dollar was at 87.67 Japanese yen, up from Thursday's close of 87.03 yen, and at 73.15 euro cents, up from 74.96 euro cents.

Meanwhile, the Australian bond market closed slightly weaker on Friday as traders awaited the US jobs report.

At 4.30pm (AEST), the September 10-year bond futures contract was trading at 94.755 (implying a yield of 5.245 per cent), down from 94.785 per cent (5.215 per cent) yesterday.

The September three-year bond futures contract was at 95.210 (4.790 per cent), down from 95.250 (4.750 per cent).

Westpac global head of interest rate strategy Russell Jones said the market was in a holding pattern ahead of the much-anticipated release pf the US jobs data.

"It's a typical pre-US non-farm payrolls trading session, really dead in the water quite frankly, and I suspect you're going to see the same pattern in Europe when in opens up,'' Mr Jones said.

"We're going to take the lead from tonight's number. The expectation is that it will probably show a bit of a recovery and slightly firmer jobs growth in the US.''

The RBA's trade weighted index was at 78.1, up from yesterday's close of 77.9.