China, Europe data boosts dollar

THE Australian dollar is higher following strong data out of China and Europe.

dollar

THE Australian dollar is higher following strong data out of China and Europe.

At 12pm AEST today, the local unit was trading at 90.15 US cents, up from 89.98 cents yesterday.

The Aussie has had a boost since yesterday's better-than-expected result in the HSBC Flash China Manufacturing Purchasing Managers' Index, which came in at a four-month high.

HSBC's PMI for China's manufacturing sector jumped to 50.1 in August, up from July's 11-month low of 47.7.

Overnight, figures showed that eurozone business activity picked up sharply in August, hitting a 26-month high point as the economy climbed out of a record recession.

The Composite Purchasing Managers' Index compiled by Markit Economics jumped to 51.7 points for August from 50.5 in July.

"The Australian dollar today has mainly been consolidating the gains from overnight where risk assets were given support from the strong Chinese PMI numbers as well as the encouraging numbers out of the eurozone," said CMC Markets foreign exchange dealer Tim Waterer.

"Both those regions, China and Europe, have given traders reason to look for some of the high yielding currencies, of which the Australian dollar is still one of them, and that's what's allowed the currency to reclaim that 90 US cent level.

"Asian equity markets are going along quite nicely so far and that should keep the Australian dollar well-supported also.

"If commodity prices and equity markets continue to find support, then so too will the Australian dollar."

Meanwhile, Australian bond futures prices were mixed.

At 12pm AEST, the September 10-year bond futures contract was at 95.925 (4.075 per cent), up from 95.915 (4.085 per cent) yesterday.

The September three-year bond futures contract was unchanged at 97.130 (2.870 per cent).

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