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$A lower in anticipation of strong US data

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AAP

2013-08-13

The Australian dollar is lower against a US dollar strengthened by moves from investors expecting strong American economic data to be released this week.

At 1700 AEST on Tuesday, the local unit was trading at 91.38 US cents, down from 91.8 cents on Monday.

Stronger American economic data will raise expectations that the US Federal Reserve will wind down its $US85 billion a month economic stimulus plan.

CMC Markets senior trader Tim Waterer said that anticipation has driven the US dollar higher against most major currencies in the past 24 hours.

"With traders pre-empting potential strength among US economic indicators due this week, the greenback found some renewed buying interest which has seen the Australian dollar ease from the 92 US cents level," he said.

At 1700 AEST, the Australian dollar was at 89.05 Japanese yen, up from Monday's close of 88.69 yen, and at 68.67 euro cents, down from 68.89 euro cents.

Figures for retail spending, business inventories, inflation and housing starts will be released in the US in the coming days.

NAB released its the monthly survey on Tuesday, showing business conditions are at a four-year low and business confidence is at its weakest since November.

Mr Waterer said the Australian dollar suffered a minor setback after the release of NAB's survey, but later recovered.

"Despite the rise in the US dollar overnight, commodity prices remain well supported and this in turn has assisted in keeping the Australian dollar above 91 US cents," he said.

Meanwhile, the Australian bond market was weaker.

Westpac senior market strategist Damien McColough said there was very little driving bond futures price changes.

"There's not a lot of volume going through," he said.

"There's some heaviness in the market due to lack of interest."

At 1630 AEST on Tuesday, the September 10-year bond futures contract was trading at 96.245 (implying a yield of 3.755 per cent), down from 96.305 (3.695 per cent) on Monday.

The September three-year bond futures contract was at 97.380 (2.620 per cent), down from 97.420 (2.580 per cent).

Mr McColough said bond traders are awaiting the release of the Westpac/Melbourne Institute Survey of Consumer Sentiment, due out on Wednesday.

Jason Cadden