The Australian dollar rose on Friday after the country's central bank provided an optimistic view of the economy, bolstering views that further interest rate cuts were off the table. Solid trade data from China, Australia's main export customer, also helped. The Australian dollar firmed 0.4 percent the day's high of $0.7658, but stayed in a narrow trading band of 76-77 US cents.
The Aussie is facing stiff chart resistance at 77 US cents, failing to breach the level four times in recent days. Gains were also capped by the greenback broad strength following US President Donald Trump's declaration that he would announce a tax reform plan in the next few weeks. The Aussie is set to end the week 0.5 percent lower.
Elsewhere, The Aussie rose 0.65 percent on the yen and 0.2 percent on its New Zealand counterpart. Both the euro and the pound fell about 0.2 percent on the Aussie. The New Zealand dollar added 0.2 percent on the greenback to $0.7198, after hitting a 2-1/2 week low of $0.7185 on Thursday. It was headed for its largest weekly drop since mid-December after the Reserve Bank of New Zealand (RBNZ) held its official cash rate steady at 1.75 percent, and flagged it could remain there for two years or more. New Zealand government bonds eased, sending yields 5 basis points higher at the long end of the curve. Australian government bond futures fell, with the three-year bond contract down 5 ticks at 98.040. The 10-year contract slipped 5.5 ticks to 97.275. Earlier, the Reserve Bank of Australia (RBA) predicted the economy would rebound smartly following a shock contraction in the third quarter of last year while headline inflation was seen at 2 percent in early 2017.
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