Traders on watch for China news
THE Australian dollar edged higher after a good performance in US stocks overnight. By late yesterday afternoon, the local currency was trading at US103.95?, up from US103.63? on Thursday.
THE Australian dollar edged higher after a good performance in US stocks overnight. By late yesterday afternoon, the local currency was trading at US103.95?, up from US103.63? on Thursday.RBC currency strategist Michael Turner said the local trading session was "uneventful".He said the market would be watching for Chinese purchasing managers' index (PMI) data, due for release tomorrow. "I think everyone's waiting to see what this PMI 's got to say on the weekend," he said.Mr Turner said a meeting of euro zone finance ministers this weekend was important but unlikely to move the market.The dollar was trading at 85.12 Japanese yen, down from 85.65, and at 77.88 euro cents, up from 77.81.Meanwhile, bond prices were slightly higher. The June 10-year bond futures contract was trading at 95.965 (implying a yield of 4.035 per cent), up from 95.945. The June three-year bond contract was at 96.550 (3.450 per cent), up from 96.500.ANZ senior economist Shane Lee said bond prices had been on a stronger trend in the past few days, as the market looked at the possibility of a slowdown in China, and an interest rate cut by the Reserve Bank."The curve's definitely steepened in the last day or two," he said. "It's been pushing up. If the RBA cuts rates next week, it could go a lot higher."Mr Lee said headwinds from China made a strong case for the RBA to cut rates at least once this year. "There's definitely a downward bias on rates, for May at least," he said. "The banks took the view that the US recovery is pretty robust now, and even if you do get a dip in payrolls in one month, they'll still think the recovery's got legs."But China's possibly another kettle of fish for them - they just need one bad number there, and the bank might have to change their mind."