Dollar down on late trade fall

THE Australian dollar finished marginally weaker after a fall in late trade.

THE Australian dollar finished marginally weaker after a fall in late trade.

Dealers said a stronger US currency and local data showing a fall in dwelling commencements and consumer confidence weighed on market sentiment.

At 5pm (AEDT) today, the Australian dollar was trading at 105.23 US cents, down from 105.49 cents yesterday.

Since 7am, the local unit traded between 105.14 US cents and 105.57 cents.

The Australian currency first dipped today following the release of weaker domestic data.

Westpac/Melbourne Institute Consumer Sentiment Index fell by 5.0 per cent to 96.1 index points in March, and dwelling commencements posted a third consecutive quarterly fall.

St George chief economist Hans Kunnen said the Australian dollar had been quite resilient in the face of negative trade data from China over the weekend showing that nation's first trade deficit in more than a year.

This was followed by comments overnight by US Federal Reserve chairman Ben Bernanke that economic conditions would improve in the US, although rising oil prices would push up inflation.

"Given the announcements from China and the United States, we've been fairly resilient," Mr Kunnen said.

"There was a reaction following the Chinese data but it's since recovered.

"It suggests to me an underlying strength to the Aussie - people have not given up on it easing, but more people are retreating from that position."

The local currency was also up almost one Japanese yen today.

At 5pm, the Australian dollar was at 87.60 Japanese yen, up from 86.61 yen yesterday, and at 80.71 euro cents, up from 80.16 euro cents.

Meanwhile, Australian bond prices were softer as investors prepare for the expiry of two government bond futures contracts.

At 4.30pm, the March 10-year bond futures contract was trading at 95.885 (implying a yield of 4.115 per cent), down from 96.020 (3.980 per cent) yesterday.

The March three-year bond futures contract was at 96.340 (3.660 per cent), down from 96.430 (3.570 per cent).

Deutsche Bank bond trader Andrew Bryan said the sluggish performance on the Australian bond market today could be explained by the expiry of the ten-year and three-year futures contracts tomorrow.

"All the volumes have been dominated by futures rolls," he said.

"US bonds have sold off and we've moved in line with that, but there's very little going through here on an outright basis - it's just people doing their futures rolls."

The Reserve Bank of Australia's trade weighted index was at 78.3, up from 78.1 yesterday.