The Australian dollar has extended its gains against the greenback, which softened after the US central bank stressed rate rises would come gradually.

At 0700 AEDT on Friday, the currency was trading at 71.96 US cents, up from 71.69 cents on Thursday.

The minutes of the US Federal Reserve’s latest policy meeting released, on Thursday (AEDT), showed that officials are closer to raising interest rates for the first time in nearly a decade but expect the pace of eventual tightening to be slow.

And in a speech on Friday morning (AEDT), Fed centrist, Dennis Lockhart, said he was comfortable raising rates, but emphasised the path would be halting, Imre Speizer, strategist, Westpac, said.

“(But) Hawk (Loretta) Mester was upbeat on employment and inflation,” he said.

The market is currently pricing in a slightly higher 68 per cent chance of a December rate rise.

Speizer said the Kiwi dollar and the Aussie were the top performers following the greenback’s broad weakness overnight.

“(That’s) despite iron ore falling two per cent to a fresh low of $45.44,” he said.

Speizer predicted the Aussie would continue to break higher on Friday, targeting 72.25 US cents.

AAP

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