The Aussie dollar’s rally, which took the Australian currency to one-month high, run out of steam on Friday as the Reserve Bank of Australia left the door open for further interest rate cuts.
RBA statement for February’s monetary decision, which included no change in interest rate, mentioned the central bank could slash its cash rate if needed.
The statement also cited concerns from the impact of slowdown in China and volatility in global financial markets on the Australian economy.
“Any sharp slowing in China is likely to have significant implications for economic conditions in the Asian region and for commodity exporters, including Australia,” the statement said.
The Australian dollar hit a high of 0.7241 against the U.S. dollar on Thursday, the highest in one month, but retreated to trade around 0.7185.
However, the Aussie is still set for its third straight weekly gain, as the green currency tumbled to a four-month low versus a basket of major currencies.
Gold climbed to a three-month high, poised to its strongest weekly gain since early January, thereby giving some support to the Aussie.
The New Zealand dollar also slipped against the greenback to 0.6703 after climbing to a high of 0.6745 the previous session.
Later in the day, investors will focus on the U.S. jobs report, which is mainly used as a guide to the Fed’s upcoming monetary decisions.
American employers added 189,000 jobs last month, while unemployment remained at 5 percent, the NFP may show.
