$A almost flat, despite leadership spill

The Australian dollar shrugged off political turmoil in Canberra to finish Thursday only slightly lower.

At 1700 AEDT on Thursday, the currency was trading at 103.73 US cents, down slightly from 103.79 cents on Wednesday afternoon.

Commonwealth Bank currency strategist Peter Dragicevich said the Australian dollar weakened a little during the afternoon session, but said it had little to do with any leadership spill in the Labor caucus.

Prime Minister Julia Gillard called a leadership spill for Thursday afternoon after senior minister Simon Crean publicly called for a caucus vote on her position.

Mr Dragicevich said the movement was due more to a rise in the value of the Japanese yen against the US dollar.

"We've seen the yen strengthen over that same period so its just coincidental, we wouldn't expect (the leadership spill) to have any bearing," he said.

"But we're talking very minor moves, there's nothing really exciting going on out there."

Mr Dragicevich said currency markets would be closely watching the first press conference of newly-appointed Bank of Japan governor Haruhiko Kuroda on Thursday night.

At 1700 AEDT, the Australian dollar was at 99.34 Japanese yen, up from 98.62 yen on Wednesday and at 80.13 euro cents, down from 80.58 euro cents.

Meanwhile, RBC Capital Markets senior economist Su-Lin Ong said Australian bond futures spent Thursday trading lower as fears surrounding Cyprus's financial problems eased.

The Cypriot parliament's rejection of a move to levy bank deposit holders, as part of a European Union-led bailout package, has weighed on market sentiment over the past few days.

But Ms Ong said concerns about the fallout from the decision had eased overnight.

"It's a bit of a spillover from last night, there has been nothing else to really give them market direction," she said.

At 1630 AEDT on Thursday, the June 10-year bond futures contract was trading at 96.405 (implying a yield of 3.595 per cent), down from 96.475 (3.525 per cent) on Wednesday.

The June three-year bond futures contract was at 96.960 (3.040 per cent), down from 97.040 (2.960 per cent).

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