Dollar higher after strong US jobs data

THE Australian dollar is higher after a strong US employment report for April gave the market reason to be optimistic about the world's largest national economy.

THE Australian dollar is higher after a strong US employment report for April gave the market reason to be optimistic about the world's largest national economy.

At 1200 AEST today, the local unit was trading at 102.81 US cents, up from 102.54 cents on Friday.

The Australian dollar rallied at the end of last week after US economic data showed the country's unemployment rate fell 0.1 per cent to 7.5 per cent in April.

However, it lost a little ground after the Australian Bureau of Statistics said local retail spending fell 0.4 per cent in March, but was up 2.2 per cent in the March quarter.

Commonwealth Bank currency strategist Joseph Capurso said the Australian dollar had shown a bit of a knee-jerk reaction to the retail figures.

"It's lost 20 or so points after that retail report came out," he said.

"The market seems to have focused on that retail number, which was weaker that expected.

"As people crunch the numbers, the Aussie dollar will track higher."

Mr Capurso said the market would closely watch the outcome of the Reserve Bank of Australia's board meeting tomorrow.

All 13 economists surveyed by AAP last week said they don't think the RBA will reduce the cash rate from its current level of three per cent but the futures market is pricing in a 57 per cent chance of a cut.

"I don't think the RBA will cut the rate tomorrow and the (Australian) labour force data out later in the week should snap back higher, so the Aussie should end the week up around 104.00 US cents," Mr Capurso said.

Meanwhile, Australian bond futures prices were lower at noon.

At 1200 AESTtoday, the June 10-year bond futures contract was trading at 96.895 (implying a yield of 3.105 per cent), down from 96.960 (3.040 per cent) on Friday.

The June three-year bond futures contract was at 97.460 (2.540 per cent), down from 97.500 (2.500 per cent).