The Australian dollar was on track for its worst weekly performance in over two months, as some cautious investors took profits in one of the year's best-performing major currencies.
The Australian dollar was a shade softer at $US0.9762, down from $US0.9779 seen late in New York. A few stop-loss sell orders lay below support at $US0.9740, a break of which could extend losses to October 19 and 20 lows of $US0.9662.
At the 5 pm local close, the dollar was buying $US97.62. It was also worth 70.2 euro cents, 61.3 pence and 78.7 yen.
For the week, the currency was down 1.1 per cent, a modest decline but still its weakest week since August 15, a testament to how well it has done this year.
It is the second best-performing major currency after the yen this year, having jumped 8.8 per cent since January.
Some traders said they wanted to take profits before next week, which may be a volatile ride for markets with central bank meetings in Australia, the United States, Britain and Europe.
A tepid rise in domestic private sector credit was an additional drag as it argued for the Reserve Bank of Australia to not raise interest rates at its November 2 meeting.
After this week's tame inflation report, the RBA's meeting next week is seen to be a close call. Even though the central bank has said time and again rates would rise from 4.5 per cent, many think it is in no hurry to tighten so soon.
A Reuters poll of 20 analysts showed 14 thought there would be no hike.
"With growth near trend, and inflation now back in the band, there's arguably little near-term urgency to move
currently 'average' borrowing rates higher," said Scott Haslem, an analyst at UBS.
But many analysts also said the RBA would not stay on hold for long.
"With the economy picking up speed, fuelled by the high terms of trade, and with the faint whiff of intensifying price
pressures due to an ever tightening labour market, we think an RBA non-move in November is only a reprieve," said Michael Blythe, an economist at Commonwealth Bank of Australia.
Reflecting cooling bets for an RBA move next week, the implied yield curve steepened. Three-year Australian bond
futures pared earlier gains to be flat at 95.08, while the 10-year contract was down 0.02 points at 94.764.
Reuters, with AAP