THE Australian dollar is virtually flat, after dropping to fresh two-month lows overnight on increasing expectations of a US interest rate hike.

At 0720 AEDT on Friday, the local unit was trading at 72.26 US cents, up from 72.21 cents on Thursday.

The US Federal Reserve indicated this week that it was considering a June interest rate rise if American economic figures to be released in the next few weeks are strong.

On Thursday, official figures showed that Australia’s unemployment rate stayed steady at 5.8 per cent for the second month in a row in April.

BK Asset Management managing director of FX strategy Kathy Lien said the jobs figures were unable to give the Australian dollar a boost because the number of fulltime jobs added to the economy fell.

“If the jobless rate did not remain steady, we would have probably seen a much deeper slide in Australian dollar,” she said. Ms Lien said the Australian dollar continues to stay under pressure from a strong US dollar, which rallied after the release of the minutes US Federal Reserve’s most recent board meeting, although the rally is losing steam.

CURRENCY SNAPSHOT AT 0720 AEDT ON FRIDAY

One Australian dollar buys:

* 72.26 US cents, from 72.21 cents on Thursday

* 79.45 Japanese yen, from 79.42 yen

* 64.51 euro cents, from 64.24 euro cents

* 107.18 New Zealand cents, from 106.91 NZ cents

* 49.48 British pence, from 49.43 pence

(*Currency closes taken at 1700 AEDT previous local session)

Source: IRESS