The Aussie was 0.2% lower at $0.6617 , after gaining 0.4% overnight on a broad risk-on rally driven by strong results from U.S. tech giants. News that U.S. officials are coordinating urgent talks to rescue First Republic Bank also dampened sentiment.
The Australian dollar was sitting precariously close to the March trough of $0.6565, and a breach would take it to depths not visited since November. The kiwi dollar eased 0.1% to $0.6141 , just a whisker away from a six-week low of $0.6112 despite also rising 0.5% overnight. Support lies at its March trough of $0.6086. The yen fell 0.7% to 134.9 per dollar after the Bank of Japan on Friday kept ultra-low interest rates, against some market bets that it could announce a change to its yield curve control policy.
The bank, however, announced a broad review of its monetary policy and modified its guidance on the future policy path by removing a pledge to keep interest rates at "current or lower levels." Sean Callow, senior currency strategist at Westpac, said the extended timeframe for the review of 1-1/2 years would dull expectations that the BOJ is itching to exit its accommodation. "But that doesn't necessarily rule out tweaks along the way; indeed at his upcoming press conference, Ueda may clarify that the BoJ is not tying its hands into 2024 and will adjust policy, if required." The Aussie dollar , however, rose 0.4% to 89.24 yen, while the kiwi also leaped 0.6% to 82.89 yen.
Local bonds gained after the decision, with yields sliding a little in tandem with its global peers.
Australian three-year yields trimmed gains to be up just 1 basis point to 3.049%, while ten years erased earlier gains, standing at 3.391%.
Markets are shifting focus to the risk events next week, with policy decisions from the Reserve Bank of Australia and Federal Reserve due on Tuesday and Wednesday.
Three out of four Australian major banks forecast the RBA to
hold steady next week, with Westpac the latest to revise lower
its call for the peak in cash rate to the current 3.6%.
(Reporting by Stella Qiu. Editing by Gerry Doyle)
