AFTER a whippy week on money markets, which saw the dollar lashed and bond yields climb, the focus next week will be on the budding signs of life in the US economy.
The dollar traded between a low of US82.30c and a high of US83.
07c on Friday before finishing at US82.96c.
After hitching up more than 2 per cent last week against the US dollar and the euro, the dollar snapped back sharply on Thursday night after a tumble on the US stockmarket, which had its biggest fall in almost two months.
Retail trade figures due out in the US on Friday were expected to show a 0.4 per cent pick-up in sales.
However, JP Morgan economist Jarrod Kerr, who expects the US economic slump to continue, had revised his expectation down to zero growth.
Analysts were at odds over whether the US dollar, which has dragged this year, could go still lower.
Westpac interest rate strategist Jonathan Cavenagh said the retail sales figures could underpin a revival in the US currency.
At some stage we will be looking for a turnaround in the US dollar and tonight's numbers could be the catalyst, he said.
NAB's chief currency strategist, John Kyriakopoulos, disagreed.
The backdrop for the US dollar is probably not that bright, he said. We don't think that this is the start of a long-lasting and strong rebound in the US dollar.
FxMAX chief economist Clifford Bennett said the US dollar was now only equal to the euro as a reserve currency.
Bond yields fell away on Friday, reversing some of the gains made on Thursday's employment figures, which showed 50,000 new jobs were added to the economy last month.
The yield on the April 2015 bond dropped 0.
0525 points on Friday to finish at 5.9225 per cent.
Interest rate markets will be sweating on Wednesday's wage price index to determine whether the tight labour market is driving up wages.
There will be an intense focus on whether the tightness in the labour market will finally feed through into wages pressures, Citigroup co-head of economics Stephen Halmarick said.
If it does, ANZ economist Cherelle Murphy said the Reserve Bank might need to increase interest rates again soon.
We cannot discount a rate rise before the election, she said.
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