Dollar on back foot after surge

THE Australian dollar is on the back foot again after spiking sharply higher on weakness in its US counterpart.

Dollar on back foot after surge

THE Australian dollar is on the back foot again after spiking sharply higher on weakness in its US counterpart.

The currency gained more than two US cents early today, one of the biggest rises in recent years, hitting a high of 96.63 US cents before backtracking and giving up much of the gains.

At 12pm AEST, it was trading at 95.42 US cents, up from 94.79 US cents yesterday afternoon.

ForexCT head of research Steven Dooley said the earlier gains were due to weakness in the US dollar.

He said traders sold off the greenback after it dropped below a key level against the Japanese yen.

The US dollar also suffered due to a rise in the euro following comments from European Central Bank (ECB) chief Mario Draghi.

Mr Draghi indicated the ECB had no intention of implementing further stimulus measures to support the euro zone economy at this stage.

"The move overnight has very little to do with the Australian dollar and everything to do with the US dollar," Mr Dooley said.

He said the next key event for currency markets would be the release of US non-farm payrolls figures for May.

If the figures show slower-than-expected employment growth, the Australian dollar is likely to rally, but it is expected to fall if the figures show strong jobs growth.

However, Mr Dooley said, the Australian dollar would remain under pressure for the foreseeable future.

Meanwhile, Australian bond futures prices were higher at noon.

At 12pm AEST today, the June 10-year bond futures contract was trading at 96.720 (implying a yield of 3.280 per cent), up from 96.660 (3.340 per cent) yesterday.

The June three-year bond futures contract was at 97.510 (2.490 per cent), up from 97.460 (2.540 per cent).

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