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AAP

2012-11-16

The Australian dollar is lower amid negative sentiment from the US and Europe and concerns over the growing conflict in Israel.

AT 1700 AEDT on Friday, the currency was trading at 103.21 US cents, down from 103.58 cents on Thursday.

The currency moved a little lower on Thursday night on negative global sentiment but traded in a narrow range of between 103.16 US cents and 103.43 cents on Friday.

Easy Forex senior currency dealer Francisco Solar said that, with no major domestic economic data releases on Friday, the Australian dollar was waiting for offshore developments.

"We're looking a little bit subdued in the Asian session," he said.

"The Aussie is just trying to find its feet ahead of the European and New York sessions tonight."

He said the local currency faced downward pressure as a result of negative global developments on Thursday night.

"There does seem to be a bit depressing markets, especially with escalating Middle East tensions, fairly weak US data and confirmation of a recession in the euro zone countries," he said.

Official data released overnight showed the euro zone slipped into recession in the September quarter, contracting by 0.1 per cent.

Meanwhile, US figures showed a drop in manufacturing and business activity in November, though the figures were distorted by Superstorm Sandy that hit the US north-east in late October.

The escalating conflict between Israel and Hamas also added to the nervousness on markets.

Mr Solar said the Australian dollar would probably follow movements on global stock markets overnight but was likely to trade between 103 and 103.50 US cents.

At 1700 AEDT, the Australian dollar was at 83.60 Japanese yen, down down from 83.81 Japanese yen on Thursday, and at 80.83 euro cents, down from 81.27 euro cents.

Meanwhile, Australian bond futures prices have drifted lower on a quiet day of trading.

At 1630 AEDT on Friday, the December 10-year bond futures contract was at 97.040 (implying a yield of 2.960 per cent), down from 97.060 (2.940 per cent) at Thursday's close.

The December three-year bond futures contract was trading at 97.510 (2.490 per cent), down from 97.530 (2.470 per cent).

Evan Schwarten