A resurgent US dollar has boosted Australian bonds as American investors worry about a stronger greenback denting company earnings.
US Treasuries firmed during offshore trade as the greenback hit a 12-year high against the euro as well as the US Dollar Index basket of foreign currencies.
The strengthening of the US dollar dented American stocks which, in turn, boosted demand for American and 10-year Australian bonds, St George chief economist Besa Deda said.
“Investors just started to worry about what the strength in the US dollar would mean for the earnings outlook for US companies,” she said.
Meanwhile, three-year Australian bond futures prices were marginally firmer as financial markets await labour force data for February.
An unemployment jump could encourage the Reserve Bank of Australia (RBA) to cut interest rates sooner.
“If you see a bad set of numbers today, then that would certainly shorten the odds for an April move,” Ms Deda said.
Economists expect the jobless rate to fall from a 12-year high of 6.4 per cent in January to 6.3 per cent in February.
At 0830 AEDT, the March 2015 10-year bond futures contract was trading at 97.468 (implying a yield of 2.532 per cent), up from 97.450 (2.550 per cent) on Wednesday.
The March 2015 three-year bond futures contract was at 98.130 (1.870 per cent), up from 98.115 (1.885 per cent).
Government bond and bank bill yields:
- CGS 4.75pct July 2017, 1.873% from 1.876% on Wednesday
- CGS 2.75 pct April 2024, 2.520% from 2.520%
Sydney Futures Exchange prices:
- March 2015 bill futures, 97.680 from 97.660
- June 2015 bill futures, 97.860 from 97.850
(*Closes taken at 1630 AEDT previous local session)