$A down on Chinese PMI, ahead of FOMC
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The Australian dollar is slightly lower following weaker than expected Chinese data and ahead of key central bank meetings.
At 1700 AEST on Wednesday, the local unit was trading at 105.04 US cents, down from 105.19 cents on Tuesday.
CMC foreign exchange dealer Tim Waterer said the local currency had an initially negative response to Chinese purchasing managers' index data, which showed that manufacturing activity had fallen to an eight-month low of 50.1 in July.
"The Aussie dollar had an initial dip after the Chinese PMI came in just short of expecations," he said.
"But this was short-lived, as the market realised that a PMI above 50 is not the worst thing in the world."
Mr Waterer said movements in the US and Australian stock markets would have had an impact on the currency.
"The local equity market held up quite well against its US counterpart, and that gave some support to the currency," he said.
Also key was investor anticipation ahead of meetings by the Federal Open Market Committee (FOMC) on Thursday morning and European Central Bank (ECB) on Thursday night.
At 1700 AEST, the Australian dollar was at 82.04 Japanese yen, down from Tuesday's close of 82.31 yen, and at 85.32 euro cents, down from 85.72 euro cents.
Meanwhile, Australian bond futures prices are lower as investors await the outcome of the central bank meetings.
At 1630 AEST on Wednesday, the September 10-year bond futures contract was trading at 96.970 (implying a yield of 3.030 per cent), down from 96.995 (3.005 per cent) on Tuesday.
The September three-year bond futures contract was at 97.440 (2.560 per cent), down from 97.480 (2.520 per cent).
ANZ senior rates strategist Tony Morriss said there was understandably little activity on markets, given the FOMC and ECB meetings.
"The volume in markets is pretty light," he said.
He acknowledged that the market had considered the Chinese PMI data, but improved house price data in Australia had little impact.
Data from the Australian Bureau of Statistics showed that house prices in capital cities rose 0.5 per cent in the June quarter.
Economists had expected a 0.7 per cent fall.
Mr Morris said investors were waiting to see what would happen at the ECB meeting on Thursday night, Australian time.
"Even the Fed meeting will probably have a limited impact," he said of its meeting beginning in the early hours of Thursday morning Australian time.
"The ECB's the big one."