The Australian dollar hovered near a decade high against the euro on Friday as Greece's fiscal crisis dragged on the common currency, while an upbeat growth outlook at home benefited the local dollar.
At the local close of trade, the dollar was at 65.11 euro cents, up from yesterday’s close of 64.39. In euro term, the common currency was mired at $1.5362, in sight of a 10-year low of $1.5330 hit offshore on Thursday.
The chart shows next levels to be tested are $1.5300, then $1.5285.
Against the US dollar, the Aussie was trading at 89.02 US cents, slightly up from yesterday’s 88.74 US cents. On the week, it is up 2.5 per cent, its best performance in five weeks.
The Aussie thrived on Thursday's bumper local jobs data, which fed talk of a possible interest rate rise here in March, but some analysts warned that troubles in Greece might yet eclipse the local rate outlook, at least in the next few weeks.
"The Greece issue is still up in the air," said Jonathan Cavenagh, analyst at Westpac. "If Greece really blows up, people will speculate that the Reserve Bank of Australia would not do anything in March."
Investors are worried about debt-laden Greece's ability to repay its debts, with 18.6 billion euros due in April and May.
A pledge from European Union leaders on Thursday to support Greece did little to appease investors due to a lack of details. That kept the euro under pressure on Friday.
Cavenagh said any gains in the Aussie in the next few weeks would probably keep it under 91 US cents as a vulnerable mood in markets would keep investors wary of riskier trades.
The Aussie is seen as a riskier currency because of its higher-yielding nature and investors' tendency to take on debt when they buy the local dollar.
It had soared over 1 US cent on Thursday after data showed far more jobs than expected were created in Australia in January, while unemployment fell to an 11-month low.
That stirred expectations the RBA may raise rates by 25 basis points at its next policy meeting on March 2 to 4.0 per cent.
Implied money market rates show investors betting on a 47 per cent chance of a hike in March. Rates are seen rising 104 basis points over the next 12 months.
Australian bond futures were little changed after Thursday's sharp losses on expectations of a possible rate rise in March. Three-year bond futures were flat at 95.09, and the 10-year contract was up 0.02 points at 94.45.
Reuters
