Dollar lower before Chinese data

THE dollar is slightly lower, as investors await an important reading of Chinese manufacturing.

THE dollar is slightly lower, as investors await an important reading of Chinese manufacturing.

At 12pm AEDT today, the dollar was trading at 103.74 US cents, down slightly from 103.77 cents yesterday.

The currency initially rose overnight, and started this morning stronger, following a drop in the US dollar.

CMC chief market strategist Michael McCarthy said that while the market would be watching the official Chinese purchasing managers' index (PMI) data due today, it would be unlikely to move the Aussie dollar much.

"It would need to be an extremely solid number, and I mean a reading above 52," he said. "I think that's unlikely. Market consensus seems to be 49.5 or 50.5, and these would not be particularly important readings."

"They would suggest that manufacturing has stabilised, but nothing more than that."

He said that aside from US employment data, due out tomorrow, there would be little of interest to the market until the Reserve Bank of Australia's (RBA) rate decision next week.

"Overall, it's more about the US dollar at the moment," he said. "Last night's rises were clearly due to US dollar weakness, and I think that will continue to be the driver, with exception to the rate cut decision next week."

The RBA is set to meet on Tuesday to decide its rate position for November. At its previous meeting, on October 2, it cut the cash rate by a quarter of a percentage point to 3.25 per cent.

Meanwhile, Australian bond prices were lower at noon. At 12pm AEDT today, the December 10-year bond futures contract was trading at 96.925 (implying a yield of 3.075 per cent), down from 96.955 (3.045 per cent). The December three-year bond futures contract was at 97.440 (2.560 per cent), down from 97.460 (2.540 per cent).