2012-10-15 15:20:26Roosevelt

Dollar down on China exports

The Australian dollar is half a cent lower, failing to hold on to the weekend gains that came after the announcement of a surge in Chinese exports, which rose 9.9 per cent in 12 months to September.


The local unit was trading at $US1.0223, down from $US1.0277 on Friday.


For the day the Australian dollar traded between $US1.0202 and $US1.0255.


CMC foreign exchange dealer Tim Waterer said the Australian dollar started the day on the front foot on the back of the Chinese trade data but then fell away.


Advertisement ‘‘However the foray above $US1.0250 was short lived, with traders again turning cautious ahead of further US corporate earnings,’’ Mr Waterer said.


‘‘A decline in commodity prices such as gold and oil appear to have blunted the Australia dollar’s performance to start the week.’’


Mr Waterer said the good Chinese trade data also decreased expectation that the Chinese central bank would embark on more economic stimulus measures.


The Australian dollar was at 80.29 Japanese yen, down from Friday’s close of 80.53 yen, and at 79.17 euro cents, down from 79.48 euro cents.


Meanwhile, Australian bond futures prices closed slightly higher.New data out on Monday showed China’s inflation rate slowed to 1.9 per cent in September and Australian new housing finance commitments rose 1.8 per cent.


UBS interest rate strategist Matthew Johnson said bonds rallied from about 11am but it didn’t coincide with the release of the economic figures.


‘‘I’m not entirely sure what is driving it,’’ he said.


‘‘Equities were a bit on the nose and that always puts a bit of a bid tone in bonds. There was nothing major driving markets.’’


The December 10-year bond futures contract was trading at 97.075 (implying a yield of 2.925 per cent), up from 97.060 (2.940 per cent) on Friday.


The December three-year bond futures contract was at 97.660 (2.340 per cent), up from 97.620 (2.380 per cent).


Markets are now awaiting the release of the minutes of the Reserve Bank of Australia (RBA) October board meeting, where the cash rate was cut by a quarter of a percentage point to 3.25 per cent.


On Friday night, RBA governor Glenn Stevens told an International Monetary Fund seminar in Tokyo that the central bank had room to cut the cash rate further ‘‘as long as inflation is okay’’.


‘‘The market has priced in an 80 per cent chance of a cut in November, that seems fair given Mr Stevens’ comments on Friday,’’ Mr Johnson said.


‘‘Where they go in December is the big question. If they do three in a row, the odds are 50-50 on that, the bond market will rally a bit on that.