Good economic data pushes dollar higher

THE Australian dollar rose in local trade after the release of some encouraging domestic and Chinese economic figures.

THE Australian dollar rose in local trade after the release of some encouraging domestic and Chinese economic figures.

At 5pm (AEST), it was trading at 107.20 US cents, up from 106.86 cents yesterday.

Since 7am (AEST) today, the local unit traded between 106.62 US cents and 107.23 cents.

During the local session, official figures showed Australian retail sales increased 0.5 per cent in July, higher than the expected 0.3 per cent.

Capital expenditure data for the June quarter was also released, showing a 4.9 per cent rise in business investment in Australia, which was above the 4.0 per cent rise economists were expecting.

In China, manufacturing activity rebounded slightly in August, after slowing for four straight months.

Easy Forex currency dealer Anthony Botros said the economic data gave the market reasons to be optimistic and buy up risker investments such as the Australian dollar.

"We had a three-pronged confidence boost for the Aussie dollar today,'' he said.

"Market sentiment did turn positive on economic growth forecasts that they're not necessarily slowing as first thought and that bodes well for the Aussie dollar specifically.''

Traders are now awaiting the release of US non-farm payrolls for August, due out tomorrow night (AEST), which is the official measure of the US employment growth.

The market is forecasting 95,000 jobs to be added to the US economy in August.

Mr Botros said if employment growth came out higher than expected there would be a rally in US stocks.

"A Wall Street rally would tend to be positive for the Aussie dollar and high yielding currencies in general,'' he said.

"Towards the end of the week, the market would be relatively contained in anticipation of the non-farm payroll figures.''

The Reserve Bank of Australia's trade weighted index was at 76.6, up from 76.5 yesterday.