Aust dollar hits fresh 34-month low

The Australian dollar fell to a fresh 34-month low in early afternoon trade despite a short rally after Australia posted its fourth straight monthly trade surplus.

The Australian dollar fell to a fresh 34-month low in early afternoon trade despite a short rally after Australia posted its fourth straight monthly trade surplus.

At 1305 AEST on Wednesday, the local unit was trading at an intra-day low of 90.95 US cents, down from 91.83 cents on Tuesday.

Official figures on Wednesday showed that Australia's trade balance in May stayed in the black for a fourth month in a row with a surplus of $670 million.

Another batch of Australian Bureau of Statistics data showed Australian retail spending rose 0.1% in the same month.

JP Morgan senior economist Ben Jarman said the Australian dollar rallied slightly on the good trade figures which eased investor concerns about a slowdown of growth in China.

Mr Jarman said the local currency had been lower since the Reserve Bank of Australia's (RBA) statement on Tuesday after its monthly board meeting at which it kept the interest rate unchanged.

"The RBA was commenting on how the currency had fallen already and might fall further, and the currency has actually played to that. It's actually fallen," Mr Jarman said.

"The fact that the currency seems to be going along with what the RBA is saying is interesting and perhaps suggests that maybe the market is thinking the RBA is seeing some things that the markets aren't."

Australian bond futures prices were down at noon.

The September 10-year bond futures contract was trading at 96.205 (implying a yield of 3.795%), down from 96.245 (3.755%) on Tuesday.

The September three-year bond futures contract was at 97.180 (2.820%), down from 97.200 (2.800%).

For investment strategies relating to the fall of the Australian currency, see Ian Verrender's Recalibrating into the dollar's downturn.