The Australian dollar held its ground near $0.84 on Friday as investors refrained from making big trades ahead of a key US jobs report. The Aussie was steady at $0.8401 in light trade, virtually unchanged from $0.8390 seen late in New York on Thursday. Equally, it barely budged against the yen at 77.80 yen.
A listless session in Asian stocks and a dearth of key economic reports in Asia trapped the local dollar within the narrow trading range of 76.35-79.90 yen held the past two weeks, and well under a 10-month high of 82 yen hit on August 10.
"You probably need a move of more than 1 percent in stocks for the Aussie to break out of its range," said Tony Darvall, a dealer at Easy Forex. Such a move could come depending on the US employment report for August. A poll shows 225,00 jobs were expected to have been lost that month as unemployment edged up 9.5 percent.
However, it is unclear how the US data will affect the Aussie. A better-than-expected outcome will encourage hopes that world economic activity is picking up, benefiting commodity currencies such as the Aussie. Yet, it can also hurt the Aussie if a good reading spurs some investors to buy the US dollar.
Australian bond futures were lower, tracking losses in US Treasuries. Three-year bond futures eased 0.02 points to 95.08, and the ten-year contract lost 0.065 points to 94.58. The implied yield curve steepened again to 50 basis points, from Thursday's 46 basis points as investors unwound some of their curve flattening bets.
The spread of 10-year Australian yields over their US cousins edge up to 218 basis points, well above 190 basis points seen just last week. Peter Jolly, an analyst at National Australia Bank, said the spread will probably be capped around 220 basis points as he doubted the rally in US Treasury prices have legs to run further.
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