Dollar lower after Chinese data

DISAPPOINTING Chinese manufacturing figures and comments from the US Fed boss have sent the dollar to a fresh one-year low.

Australian dollar

DISAPPOINTING Chinese manufacturing figures and comments from the US central bank boss have sent the Australian dollar to a fresh one-year low.

The local unit went as low as 96.28 US cents this morning, its weakest level since June 2012.

At 12pm AEST, it was trading at 96.40 US cents, down from 97.82 cents yesterday.

Recent speculation that the Federal Reserve was considering winding back its economic stimulus plan has helped the US dollar rally against all the major currencies, including the Australian dollar. In testimony to Congress last night, Australian time, Fed chairman Ben Bernanke said the central bank could phase out its $US85 billion-a-month bond-buying program, called quantitative easing (QE), if the US economy continued improving.

The Australian dollar was dealt a further blow late this morning when a HSBC survey showed that manufacturing activity in China started to fall in May. Easy Forex currency dealer Tony Darvall said he believed the Australian dollar could fall further, even to below 95 US cents, in the coming weeks.

"Sellers are in control," he said. "There isn't any reason for the Australian dollar to reverse unless we get some clarification comments from the Fed."

"The China news really cements the outlook."

Mr Darvall said the release of weekly unemployment benefit claims from the US will be closely watched during offshore trade tonight.

"It's all about US jobs data, because that's the key catalyst whether Bernanke will start tapering QE," he said. "Weak US data is what's needed for the Australian dollar."

Meanwhile, Australian bond futures prices were lower at noon. At 12pm AEST today, the June 10-year bond futures contract was trading at 96.620 (implying a yield of 3.380 per cent), down from 96.730 (3.270 per cent) yesterday. The June three-year bond futures contract was at 97.360 (2.640 per cent), down from 97.420 (2.580 per cent).