$A hits six-week high helped by China data

On Monday 24 October 2011, 18:08 EST

The Australian dollar hit a six-week high, buoyed by encouraging Chinese manufacturing data.
At 1700 AEDT on Monday, the Australian dollar was trading at 104.16 US cents, over one and a half US cents higher from 102.43 cents on Friday.
At its local close the Australian dollar was just a fraction below its intraday high at 104.18 US cents, which was the strongest level for local unit against its American counterpart since September 12.
Chinese manufacturing activity in October hit a five-month high, lifted by a pick-up in output and orders, the HSBC purchasing managers index reported on Monday.
CMC Markets foreign exchange dealer Tim Waterer said the Chinese manufacturing figures gave the Australian dollar a lift in the early afternoon.
"It gave the currency a kick along, taking it past the 104.00 US cent level," Mr Waterer said.
"That was the key even today, as was the fact that we had a bumper day on Asian stock markets as well."
Mr Waterer said markets were optimistic there would be a resolution the eurozone government debt crisis this week, with European leaders scheduling another meeting for Wednesday.
The euro hit a six-week high against the US dollar at 139.50 US cents on Monday.
"We haven't got the result at this stage, there's a fair bit of work to be done.
"But it does appear from the rhetoric in the eurozone that they are progressing in the right direction," Mr Waterer said.
At 1700 AEDT, the Australian dollar was at 79.43 Japanese yen, up from Friday's close of 78.62 yen, and at 74.74 euro cents, up from 74.15 euro cents.
Meanwhile, Australian bond prices were lower.
At 1630 AEDT on Monday, the December 10-year bond futures contract was trading at 95.465 (implying a yield of 4.535 per cent), down from 95.480 (4.520 per cent) on Friday.
The December three-year bond futures contract was at 96.090 (3.910 per cent), down from 96.140 (3.860 per cent) previously.
It was reported that US President Barack Obama will try to fix the nation's housing crisis, with preparation underway to announce new rules to ease refinancing for homeowners with little or no equity.
UBS interest rate strategist Matthew Johnson said the Chinese data and the White House announcement helped Asian equities and the Australian dollar to rally, while safe-haven assets such as bonds fell.
"That got the (bond) market moving in a downward direction," he said.
Mr Johnson said the focus for markets for the next few days would be the outcome of meetings by European leaders, with a second summit scheduled for Wednesday.
"What happens in Europe is the key thing, if they mess it up, it's going to be nasty," Mr Johnson said.
On Wednesday, the Australian Bureau of Statistics will publish the consumer prices index figures for the September quarter, the key measure of inflation.
The Reserve Bank of Australia's trade weighted index was at 76.2, on Monday, up from 75.2 on Friday.

Monday, 24 October 2011