THE Australian dollar retreated from two-month highs in Asia today largely in line with broad support of the US dollar.
Traders said speculation of further monetary policy easing in Japan dominated trading in Asia, weakening the yen and strengthening the US dollar.
"Today we saw it bid up on further hopes for more easing from the Bank of Japan and that strength has translated to a slightly weaker yen," said David Scutt, currency trader at Arab Bank. The BOJ's next policy meeting will be held next week.
Greg Gibbs, currency strategist at RBS in Singapore said the Australian dollar was weaker against the US dollar, along with other major currencies such as the New Zealand dollar, the Canadian dollar and the euro.
The broad US dollar gains could be linked to safe haven flows fuelled by uncertainty surrounding the bailout of Cyprus.
