The Australian dollar rallied 1 percent on Friday after the country's central bank bluntly warned that rates would have to rise to contain inflation, sending investors scrambling to price in a hike in the next month or two. By late Friday, the Aussie had bounced to $1.0710, from a low of $1.0532, though it remained short of the 29-year peak of $1.1012 hit early in the week.
The currency also rebounded on the yen and euro, gaining nearly two yen to 86.05. The euro retreated almost four cents to A$1.3596. The Aussie jumped to NZ$1.3554 on its New Zealand counterpart. The New Zealand dollar bounced back to its opening levels of $0.7869/79 after hitting a near four-week low of $0.7816 overnight.