Aussie dollar down on China PMI

THE Australian dollar has dropped below 103 US cents on weaker-than-expected Chinese data.

THE Australian dollar has dropped below 103 US cents on weaker-than-expected Chinese data.

At midday AEST today, the local unit was trading at 102.88 US cents, down from 103.34 at yesterday's close.

Since 7am AEST today, the Australian dollar traded between 102.87 US cents and 103.36 cents.

CMC foreign exchange dealer Tim Waterer said the Australian dollar had pushed downwards on the Chinese data.

"The news factored that it was below the previous reading," he said.

"That was taken as a negative by traders, and because the Australian dollar is hypersensitive to all things China, the release was enough to bring the currency back below the 103 level."

China's non-manufacturing purchasing managers index (PMI) was 56.1 in April, down from 58.0 in March, according to the data released today.

Mr Waterer said markets were also subdued as they waited for crucial job figures from the US tomorrow.

"We've also seen traders get anxious about non-farm payrolls data tomorrow night," he said.

"The ADP number we saw last night wasn't the greatest indicator, and if we see a similar result tomorrow, we might see some nerves bubble to the surface again regarding the US recovery.

"I would expect some of the higher-risk currencies to trade a bit lower in the lead-up to that."

The ADP Small Business Report in the US - released on Wednesday - showed that firms had reduced hiring in April, adding only 119,000 jobs, compared to 201,000 in March.

Meanwhile, Australian bond future prices were lower at noon.

At midday AEST today, the June 10-year bond futures contract was trading at 96.485 (implying a yield of 3.515 per cent), down from 96.510 (implying a yield of 3.490 per cent) yesterday.

The June three-year bond futures contract was at 97.160 (2.840 per cent), down from 97.190 (2.810 per cent).