Aust dollar closes lower

SYDNEY - The Australian dollar closed lower after investors failed to resurrect it from overnight lows despite rising risk sentiment throughout the trading day.

At 1700 AEST, the local currency was trading at US$0.8691/95, down from Thursday's close of US$0.8740/42.

During Friday's domestic session, the unit moved between a low of US$0.8610 and a high of US$0.8711, according to IRESS data.

CMC Markets foreign exchange dealer Jian Wei said the Australian currency was caught in the slipstream of risk appetite that pushed the domestic stock market to close higher.

"We were under pressure this morning," Mr Wei said.

"But there's been a rally on equity markets led by the banks, and the Aussie dollar, of course, solely followed (the) equity markets.

"Investors are looking for high risks, and if they're looking for high returns the Australian dollar will always get support from that."

Currency traders tend to look to share markets as a barometer of risk sentiment, in the absence of decisive economic data.

The Australian share market closed moderately higher on Friday driven by gains on financial stocks.

The benchmark S&P/ASX200 index was up 12.1 points, or 0.26 per cent, to 4713.3 points, while the broader All Ordinaries index gained 6.8 points, or 0.14 per cent, to 4714.8 points.

AT 1615 AEST, the Sydney Futures Exchange, the December share price index contract was one point higher at 4728 points on a volume of 30,034 contracts.

But the positive lead wasn't enough to help recover all the Australian dollar's lost ground from Thursday's offshore trade.

The unit opened the trading day at US$0.8646/51 after he US National Association of Realtors said existing home sales fell 2.7 per cent in August to 5.1 million, which was below market expectations of 5.4 million.

Mr Wei said the Australian dollar losses could be reversed by favourable US durable goods data for August, which is due at 2230 AEST during Friday's offshore trade.

The median market forecast is a 2.2 per cent rise in August.

Mr Wei said a positive result for the series could see the local unit "sit comfortably" above US$0.8700 until Monday.

CURRENCY TABLE:

CURRENCY SPOT PREVIOUS CLOSE

AUD/USD 0.8691-95 0.8740-44
AUD/JPY 78.78-82 79.14-18
AUD/EUR 0.5915-21 0.5917-27
AUD/NZD 1.2078-85 1.2089-96
AUD/GBP 0.5433-38 0.5335-45
EUR/USD 1.4688-90 1.4759-61
USD/JPY 90.64-66 90.52-55
EUR/JPY 133.14-16 133.65-68

(*Closes taken at 1700 AEST previous local session)

At 1600 AEST, the Reserve Bank of Australia's (RBA) trade weighted index (TWI) was at 67.5, down from Thursday's close of 67.7.

- AAP