Dollar surges after weak US data

THE dollar is half a cent higher after recent US data raised concern about the strength of their economy.

European data seemed to be one of the main things pushing the Australian dollar higher. (AAP Image/Julian Smith)

THE Australian dollar is half a US cent higher after recent economic data from the US raised concern about the strength of the American economy.

At 12pm AEST today, the local unit was trading at 91.54 US cents, up from 90.98 cents yesterday.

Since 7am AEST today, the Australian dollar has traded between 91.19 and 91.64 cents.

Last night, Australian time, the US producer price index (PPI) for July was released, showing an unchanged result for the month.

The PPI measures the price of goods at the farm or factory gate before transport and other costs are added.

ForexCT head of research Steven Dooley said the result could mean the US Federal Reserve won't wind down its massive economic stimulus plan any time soon.

"It means that inflation is being sucked out of the US economy," he said.

"Falling inflation is a sign of a stalling economy."

Mr Dooley said the flat PPI result caused the US dollar to fall, push the gold price up, and boosted the Australian dollar.

He said that currency traders were looking to sell the Australian dollar if it got to 92.20 US cents but that could change if upcoming US economic data confirmed the weakness seen in the PPI figures.

Last night, the US will release the consumer price index for July, industrial production for the same month and a raft of other data.

"A poor number from any of those figures could see the Aussie dollar break higher," Mr Dooley said.

"A break above 92.20 US cents will completely change the picture and people will think, maybe, they can ride the Aussie up to 94 US cents."

Meanwhile, the Australian bond market was weaker.

At 12pm AEST, today, the September 10-year bond futures contract was trading at 96.085 (implying a yield of 3.915 per cent), down from 96.145 (3.855 per cent) yesterday.

The September three-year bond futures contract was at 97.260 (2.740 per cent), down from 97.300 (2.700 per cent).

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