Dollar still higher after Chinese data

THE dollar is higher, still enjoying a boost from recently released good Chinese manufacturing figures.

dollar

THE Australian dollar is higher, still enjoying a boost from recently released good Chinese manufacturing figures.

At 12pm AEST today, the local unit was trading at 89.98 US cents, up from 89.84 cents yesterday.

Since 7am AEST today, the Australian dollar traded between 89.73 and 90.27 US cents.

On Sunday, Purchasing Managers' Index (PMI) data from China showed manufacturing activity strengthened in August to a 16-month high.

HSBC released its own Chinese manufacturing index yesterday, showing the first month of expansion in the sector since April.

Commonwealth Bank currency strategist Peter Dragicevich said the Australian dollar continued to strengthen on the back of these figures.

"We did see the improved sentiment carry over into the offshore session and it continued on this morning, given the improved equity market performance in Europe overnight," he said.

The Australian dollar lost some ground after the release of weak retail spending figures at 11.30am AEST, from the Australian Bureau of Statistics.

"It is the fourth month in a row that we've has a weak figure, but we will see later on today what the Reserve Bank of Australia's latest thoughts are this afternoon," Mr Dragicevich said.

The Reserve Bank board today is widely expected to keep the cash rate unchanged at 2.5 per cent, after making a quarter of a percentage point cut in August.

Mr Dragicevich said the focus would be on the short statement the RBA releases with the decision.

"They may provide some colour on the Aussie dollar, reiterating their view that it is still high," he said.

Meanwhile, Australian bond futures prices were lower at noon.

At 12pm AEST today, the September 10-year bond futures contract was trading at 96.035 (implying a yield of 3.965 per cent), down from 96.040 (3.960 per cent) yesterday.

The September three-year bond futures contract was at 97.170 (2.830 per cent), down from 97.190 (2.810 per cent).

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