Dollar lower after China data rally ends

 

dollar symbolsThe Australian dollar is lower after a rally sparked by strong Chinese data fizzled out during the offshore session.

At 0700 AEST on Friday, the local unit was trading at 92.27 US cents, down from 92.65 cents on Thursday.

Overnight, the currency peaked at 92.75 US cents, after a HSBC survey showed that Chinese manufacturing activity hit a five month high in May.

Bank of New Zealand markets strategist Kymberly Martin said the Australian dollar surged on the news but then started to fall as the US dollar rallied against all the major currencies.

“I think the weakness overnight was reflective of broad US dollar strength as opposed to anything specific to the Australian dollar,” she said.

“When you look across most of the major currencies the US dollar has strengthened pretty much across the board.”

Martin said it is hard to pinpoint what drove the rally in the US dollar overnight, because data from America was mixed.

US initial unemployment claims rose slightly more than expected and existing home sales rose in April for the first time this year.

Martin said markets will be focusing on the release of the German IFO business sentiment survey for May, due out late on Friday night, Australian time.

She expects the Australian dollar to trade in a range between 92.10 US cents and 92.70 cents on Friday.

AAP

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