The Australian sharemarket bounced towards the upper end of its two month-long trading range as commodity markets rallied in the wake of improved US jobs data on Friday.
The S&P/ASX 200 index climbed to a 1.1 per cent gain and closed up 53 points, or 0.93 per cent, at 5773.6 on volume 24 per cent below average as the banks and miners led a broad rally.
Commonwealth Bank rallied in-line with its peers after the bank suggested its failure to report 53,500 money-laundering breaches boiled to down to one computer-coding error, suggesting the fine would be less than feared.
The Australian dollar fell US0.4¢ to US79.70¢ as the US dollar rallied on a turnaround in the non-farm payroll report.
However, government 10-year bond yields dropped 4.5 points to 2.62 per cent and US 10-years were steady at 2.26 per cent as global bond investors continued to dismiss growth optimism and inflation risks.
Futures exchange data showed that “leveraged funds” turned overall net short against the US dollar for the first time since May 2016, with long-bets on commodity currencies like the dollar the highest in three years.
“The potential for a short squeeze in the US dollar is building,” ANZ strategists said.
Spot iron ore jumped 1.5 per cent to $US74.12 a tonne on Friday and Singapore futures were up another 4 per cent today as steel prices rallied on reports of production curbs in one Chinese province.
The Shanghai composite index was slightly firmer at the close of the ASX after the People’s Bank of China drained cash from the banking system as it failed to roll-over maturing short-term funding.