Dollar hovers at three-week highs
The Australian dollar held near three-week highs against its US counterpart on Monday and scaled seven-month peaks versus the yen with investors focusing on a eurozone finance ministers meeting later in the day.
The Aussie marked time at $US1.0460, having rallied more than 1 per cent last week. It was a whisker away from a two-month high of $US1.0480 hit in November, and a break above would see it aim for the September peak of $US1.0625.
Market sentiment sharply improved on Friday on hopes Greece will finally secure more emergency loans to keep it afloat.
Eurozone finance ministers meet on Monday for a third time in as many weeks to hammer out a deal for cash-strapped Greece before its debt repayments come due mid-December.
"The risk is if Europe doesn't (give aid to Greece), the disappointment factor is going to be high," said a trader at a foreign bank in Sydney.
Should eurozone officials hammer out a deal for Athens, as it is widely expected, he said the Aussie would be well supported, but wouldn't hit the roof either.
"A lot of positive sentiment has already been priced in," he said.
Key data for Australia this week is Q3 business investments due Thursday. Forecasts are for a 2 per cent gain, following a solid rise of 3.4 per cent the previous quarter, but a weak report could raise the chances of an interest rate cut.
Markets put around 50-50 chance of a 25 basis-point cut by the Reserve Bank of Australia to 3 per cent when it meets next week.
Investors continued to make short shrift of the yen on expectations of bolder stimulus to spur Japan's economy, sending the dollar to fresh seven-month highs.
The Aussie powered up to 86.42 yen, and last change hands at 86.00. It has made a lofty 4.3 per cent gain so far this month and could take a crack at this year's peak of 88.62 set in March.
Improved risk sentiment sent Australian government bond futures reeling with the three-year contract skidding to its lowest in more than two months at 97.240. It last traded at 97.270, flat on the day.
The 10-year contract plumbed one-month lows around 96.765, before recovering to 96.805, up 0.025 points.