THE Australian dollar closed lower today on weaker demand for high-yielding assets that have been affected by attempts by China to curb economic growth and concerns about sovereign debt in Greece.
At 5pm AEDT, the Australian dollar was trading at 88.69 US cents, down 0.37 per cent from Friday's close of 89.02 cents.
From 7am AEDT, the local unit traded between 88.65 US cents and 88.85 cents.
CMC Markets foreign exchange dealer Tim Waterer said trading on local currency markets on Monday had been "rather mundane".
"Trading ranges have been uncharacteristically tight," Mr Waterer said.
"It is simply a case of the quiet trading conditions in markets with the Chinese New Year and the US holiday tonight."
Mr Waterer said measures by China to restrain economic growth had hampered financial markets during Friday's offshore session (AEDT).
China's central bank announced on Friday that the country's banks would have to lift reserve requirements by half a percentage point - to 16.5 per cent for large lenders and to 14.5 per cent for smaller institutions from February 25.
Chinese leaders worry that stimulus-driven lending is fuelling a dangerous bubble in stock and real estate prices.
It was the second time in a month Chinese authorities had tightened credit.
"That caught markets off-guard and that sent the Aussie down a (US) cent on Friday," Mr Waterer said.
"We have seemed to have recovered from that.
"There is still a reluctance for any break-out moves in the Asian session today."
Financial markets were also awaiting a meeting of European Union (EU) finance ministers in Brussels on Monday about concerns over Greece's sovereign debt, Mr Waterer said.
"What has come out of the EU so far has been a bit too vague for markets so far," he said.
"The markets are after specifics with what is the path, going forward, with Greece."
At 1700 AEDT, the Australian dollar was trading at 79.94 Japanese yen, up from Friday's close of 79.88 yen, and at 65.26 euro cents, up from 65.11 euro cents.
The euro finished at 1.3594 US dollars, down from Friday's close of 1.3671 US dollars, and 122.52 Japanese yen, down from 122.67 yen.
The US dollar was at 90.14 Japanese yen, up from 89.73 yen on Friday.
Meanwhile, the Australian bond market closed firmer.
At 4.30pm AEDT, the yield on the Commonwealth Government April 2020 bond was at 5.536 per cent, down from Friday's close of 5.575, while the yield on the May 2013 bond was at 4.854 per cent, down from 4.913 per cent.
On the Sydney Futures Exchange, the March 10-year bond futures contract was at 94.470, up from Friday's close of 94.425, while the March three-year bond futures contract was at 95.120, up from 95.070 previously.
Westpac senior market strategist Damien McColough said the local bond market was subdued on Monday for Chinese New Year after firming during Friday's offshore session following reports of China slowing its economy.
"That was the major driver of sentiment," Mr McColough said.
At 4.30pm AEDT, the 90-day bank bill rate was at 4.170 per cent, down from Friday's close of 4.240 per cent, while the 180-day bank bill rate was at 4.390 per cent, down from Friday's close of 4.420.
At 4pm AEDT, the RBA's trade weighted index (TWI) was at 69.3 points, where it closed on Friday.
Meanwhile, the Australian share market closed lower with little to guide it other than a weak lead from Wall Street on Friday and mostly softer base metals prices.
A public holiday in the US overnight on Monday also had traders reluctant to take new positions.
The benchmark S&P/ASX200 index fell 16.6 points, or 0.36 per cent, to 4,545.5 points, while the broader All Ordinaries index was down 18.4 points, or 0.4 per cent, to 4,570.4 points.
On the Sydney Futures Exchange, the March share price index futures contract was off six points at 4,528 points, on volume of 19,390 contracts.
IG Markets market analyst Ben Potter said trading on the local bourse was subdued.
"There's a bit of nervousness ahead of this meeting of the EU (European Union) tonight where it's expected they will come up with some further rhetoric about the Greece and Portugal (debt) situation," Mr Potter said.
"We also have the fact that US markets will be on holiday for Presidents' Day as well, so the (Australian) market's pretty defensively postured with a lot of selling amongst cyclicals (cyclical stocks).
"Also, you had that tightening on Friday by Chinese officials trying to slow lending there, so all in all those concerns are curbing investors' risk appetite."
In the resources sector, global miner BHP Billiton reversed 16 cents to $40.66 and Rio Tinto dropped $1.37 to $70.57.
Steel producer BlueScope Steel was eight cents lower at $2.48 as it said it expected to recover to a small full-year profit after reporting a first-half loss.
Oil and gas producer Woodside Petroleum climbed 40 cents to $43.20 and Santos was 10 cents richer at $13.45.
Among the major banks, National Australia Bank slipped nine cents to $24.31, Westpac added 10 cents to $23.30, Commonwealth Bank, which went ex-dividend, fell 72 cents at $51.58 and ANZ was nine cents lower at $20.50.
Bendigo and Adelaide Bank rose 30 cents to $10.20 after it doubled first half profit.
In the media sector, West Australian Newspapers Holdings shed 33 cents to $7.17 after booking a a 15.4 per cent fall in first half net profit.
News Corp was up 18 cents at $17.50 and its non-voting stock improved 10 cents to $14.80.
Consolidated Media picked up two cents at $3.04 and Fairfax eased four cents to $1.71.
Telco Telstra firmed two cents to $3.14.
Retailer Woolworths gained 18 cents to $25.73 and Wesfarmers, which owns Coles, advanced 23 cents to $29.26.
In the gold sector, Lihir dipped three cents to $2.83 and Newcrest descended 50 cents to $32.18.
The price of gold in Sydney was $US1092.18 per fine ounce, up $US1.23 on Friday's close of $US1090.95.
Among other stocks, Healthscope lost 20 cents to $4.43 after coming out of a trading halt. Healthscope on Monday lifted its first half profit and said it expected stronger earnings in the second half.
Plumbing supplier Crane Group dumped 46 cents to $8.82 as it downgraded its annual earning guidance after posting a 47.3 per cent fall in first half profit.
The top-traded stock by volume was oil and gas explorer Samson Oil & Gas, with 396.3 million shares worth $13.58 million changing hands. Samson Oil & Gas was 0.2 cents, or 7.14 per cent, higher at three cents.
National turnover was 1.88 billion shares worth $3.34 billion, with 617 stocks down, 442 up and 304 unchanged.
On Wall Street on Friday, the Dow Jones Industrial Average index fell 45.05 points, or 0.4 per cent, to 10,099.14 points.
