Dollar closes more than 1 US cent higher

The Australian dollar closed almost a US cent higher dollar despite an apparent lack of reaction to the central bank’s latest statement on monetary policy.

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At 1700 AEDT on Friday, the Australian dollar was trading at 101.42 US cents, up from Thursday’s close of 100.49 cents. Since 0700 AEDT, the local unit traded between 101.27 US cents and 101.75 cents – its highest daily trading range since it was floated in December 1983.

National Australia Bank head of currency strategy John Kyriakopoulos said the Reserve Bank of Australia statement on monetary policy was consistent with NAB’s expectations.

The RBA forecast underlying inflation to be three per cent at the end of 2012, the same as it forecast in the previous statement in August.

The new forecast showed underlying inflation stepping up from 2.5 per cent through this year to three per cent at the end of 2012.

Mr Kyriakopoulos there was not much movement in the Australian dollar following the statement.

“It’s understandable ahead of the US payrolls report, which comes out tonight, so I don’t think too many traders are prepared to push it around too much until we get that news,” he said.

“We’re very beholden to the message on the health of the US economy that we get from the payrolls report.” US non-farm payrolls, a key indicator of the US unemployment, are due on Friday night (AEDT).

Mr Kyriakopoulos said if the payrolls number was strong, the Australian dollar would weaken, and if the data was weak the Australian dollar would rise further.

“We haven’t seen the high for this cycle, 105 (US cents) looks like it’s on the cards,” he said.