Aussie dollar consolidates above 70 U.S. cents

The Australian dollar consolidated above 70 U.S. cents overnight as the greenback lost ground against commodity-based currencies on fresh price rises.

At Asia's open on Friday (0700 local time), the Australian dollar was trading at 70.78 U.S. cents, up from 70.40 U.S. cents at Thursday's close.

The local unit bounced to a three-week high of 71.29 U.S. cents overnight as the greenback softened on weak economic data that disappointed the market and showed further evidence of a slowing U.S. economy, Commonwealth Bank of Australia chief currency strategist Richard Grace said.

The bounce in crude prices also helped, Grace said, noting "in the short-term, with the U.S. dollar underperforming, the (Aussie dollar-U.S. dollar cross) should remain supported."

Traders will be closely watching the Eurozone's inflation data and the first estimate of fourth quarter U.S. GDP this evening and the outcome of the Bank of Japan's policy meeting which should generate some "modest" volatility.

While the Bank of Japan isn't expected to change their monetary policy, if they do decide to add stimulus, the Australian dollar will benefit, OM Financial senior client advisor Stuart Ive said.

"Generally speaking it adds to risk-on (sentiment)."

At 1019 local time, the Australian dollar was trading at 70.84 U.S. cents. Endit