Dollar up on Chinese, local data

THE dollar is half a US cent higher after the release of encouraging local employment figures and Chinese inflation data.

THE dollar is half a US cent higher after the release of encouraging local employment figures and Chinese inflation data.

At 12pm AEST today, the local unit was trading at 105.90 US cents, up from 105.45 cents yesterday.

Just after midday, the currency reached an intraday high of 106.02 US cents.

Late this morning, official Australian jobs data showed the unemployment rate fell 0.1 per cent to 5.2 per cent in the July and total employment grew by 14,000.

Soon after, Chinese data was released, saying that inflation had slowed to 1.8 per cent in July.

The low inflation number would give China's central bank leeway to take steps to boost its slowing economy.

Commonwealth Bank currency strategist Joseph Capurso said the Australian dollar got a lift from the two sets of data.

"Particularly the rebound in fulltime employment (in Australia) was quite influential in that move," he said. "Overall, it's a good environment for the Australian dollar."

"In parts of the bond market, yields rose as well. So, that was also supportive for the Aussie dollar."

Mr Capurso said more Chinese economic figures would be released this afternoon: for industrial production and retail sales.

He said the dollar could lose ground in the afternoon, possibly going as low as 105.60 US cents, with expectations that the second set of Chinese data would be a little weak.

Meanwhile, the Australian bond market is weaker.

At 12pm AEST today, the September 10-year bond futures contract was trading at 96.745 (implying a yield of 3.255 per cent), down from 96.765 (3.235 per cent) yesterday.

The September three-year bond futures contract was at 97.180 (2.820 per cent), down from 97.220 (2.780 per cent).