The Australian dollar was hovering around one-month lows on Friday as commodities remained under pressure and investors fretted about the chances of further US stimulus.
The Aussie slipped to $US1.0305, from $US1.0337 in late trade Thursday, having been as deep as $US1.0276 today. its lowest since July 25.
But investor caution benefited Australian government bonds, which jumped to one-month highs. Three-year bond futures were last at 97.530, having climbed as far as 97.570. Key resistance was now seen at 97.598, the 50 percent retracement of the June-August decline.
The 10-year contract rose to 97.02, its strongest since August 3, and last stood at 96.965 giving an implied yield of 3.03 per cent.
Global growth worries in Europe, the United States and increasingly China, have been weighing on the Aussie. That has combined with a sharp fall in spot iron ore prices, to pull the Aussie down nearly 2 per cent for the month.
Iron ore is Australia's single biggest export earner and prices hit their lowest levels since late 2009 this week.
Support for the Aussie is seen initially at the cloud top of $US1.0279, ahead of $US1.0220, the 38.2 per cent of the May-Aug rise. Resistance is found at $US1.0311, Thursday's high.
"Markets are still a bit concerned about slowing commodity prices in Australia and New Zealand," said Tim Kelleher, head of institutional FX sales at ASB Bank.
A looming address by US Federal Reserve chief Ben Bernanke cast a shadow on risk assets, with the Antipodean currencies struggling around multi-week lows against the euro, yen, sterling and Swissy.
Doubts have grown that Bernanke will offer any signal of a further monetary stimulus when he speaks in Jackson Hole later in the day.
The euro was on track to post a 3.7 per cent gain on the Aussie in August, its largest monthly increase since March. Investors have been trimming short euro positions even though there has yet to be a concrete plan to tackle the region's debt problems.
The euro climbed to a two-month peak of $1.2170 and was last at $1.2142, with technicals suggesting a consolidation on the horizon.
Reuters