Australian dollar below 10-year high

The Australian dollar held in a narrow range against the US currency on Friday after easing off a fresh 10-year high in offshore trade on profit-taking and a rethink on when the Federal Reserve might cut rates this year.
"The Aussie dollar is consolidating on recent gains above the $0.8050 level and sentiment remains positive," said Tony Morriss, senior currency strategist at ANZ Investment Bank. The Aussie dollar was quoted at $0.8053/56 compared with $0.8059/63 here late on Thursday, according to Reuters data. It ranged from $0.8050 to $0.8077.
"The lack of news has meant some people have decided to take some short-term profits," said Peter Pontikis, treasury strategist at Suncorp. The US dollar staged a broad rebound in offshore trade as investors reinterpreted Wednesday's Federal Reserve statement as meaning interest rates there will remain steady for sometime yet, instead of suggesting a rate cut by mid year.
The Aussie had reached $0.8093 offshore, buoyed by stronger metal prices and on buying on the cross against the yen after Bank of Japan Governor Toshihiko Fukui said on Thursday he did not want to be seen by markets as having a tightening bias.
"The prospect of interest rates in Japan staying low for the forseeable future, combined with the recent recovery in risk appetite, encouraged market participants to rebuild carry trade positions, and steady Aussie/yen demand helped underpin the Aussie," nabCapital currency strategist John Kyriakopoulos said.
Three weeks ago a bout of risk aversion led investors to unwind yen carry trades, which involve borrowing the yen cheaply to invest in high-yield currencies, such as the Aussie or kiwi.
The Aussie/yen cross also eased on profit-taking to be quoted at 95.21/31 yen, still up from 94.67/77 on Thursday. It had peaked at 95.37 yen offshore, taking its gains to as much as 7.8 percent since falling to a five-month low on March 6.
The strength of the Aussie dollar has been underpinned by speculation Australia's central bank will increase interest rates by 25 basis points to 6.50 percent as early as April after it warned last week the outlook for inflation was higher than ideal.
The 30-day interbank futures market on Friday priced in a 50 percent chance the Reserve Bank of Australia (RBA) will lift rates to a 10-year high at its April 3 policy meeting. That risk moves up to a four-in-five chance of rise in May or June.