Dollar rebounds in late trade

The local unit has lifted close to US76.5c despite investor caution ahead of the Reserve Bank’s meeting.

The Australian dollar has rebounded amid market uncertainty about a rate cut next week.

At 5pm AEST on Thursday, the currency was trading at 76.46 US cents, up from 76.11 US cents on Wednesday.

CMC chief market analyst Ric Spooner said the rise indicated investors were reluctant to take any more drastic action until the Reserve Bank monthly meeting next Tuesday.

“We’ve arrested yesterday’s big decline and we still haven’t broken down any major support levels,” he told AAP.

“That really reflects market pricing (53 per cent) of a rate cut next week.” He said the firmness of oil prices had also boosted the dollar as well as the Bank of Japan’s decision to leave rates on hold. Mr Spooner said the yen had lifted following the BOJ board meeting, which in turn made investors more bullish about the greenback and attracted some back to the Australian dollar.

At 5pm AEST, the local currency was at 82.78 Japanese yen, down from 84.60 yen on Wednesday, and at 67.42 euro cents, up from 67.24 euro cents.

Meanwhile, bonds rallied as investors sought safe assets in case of a rate cut next week.

At 4.30pm AEST on Thursday, the June 2016 10-year bond futures contract was trading at 97.485 (implying a yield of 2.515), up from 97.390 (2.610 per cent) on Wednesday.

The June 2016 three-year bond futures contract was at 98.130 (1.870 per cent), up from 98.060 (1.940 per cent).

AAP