$A down despite strong Chinese PMI

The Australian dollar has fallen almost half a US cent cent despite a positive reading for Chinese manufacturing.

At 0700 AEDT on Friday, the Australian dollar was at 104.71 US cents, down from Thursday's close of 105.14 cents.

Westpac New Zealand senior market strategist Imre Speizer said there was no clear reason why the Aussie dollar had weakened.

"It experienced quite a fall overnight, and that goes against what other currencies are doing," he said.

"There's no obvious catalyst."

Mr Speizer said changed patterns of buying for the Australian dollar plus a late fall on China's stock market may have contributed to the drop.

The local currency began to fall on Thursday afternoon, despite an optimistic reading for Chinese manufacturing activity.

The HSBC purchasing managers' index (PMI) for January came in at 51.9, a rise from 51.5 in December. A reading above 50 indicates growth while anything below 50 represents contraction.

Mr Speizer said investors would focus on local and regional events next week, with a Bank of New Zealand meeting one point of importance.

"We think they (the bank) might have a shift in a more dovish direction," he said.

"That would weaken the kiwi dollar and, given you get a lot of cross-trading, that could push the Aussie dollar higher."

The Reserve Bank of New Zealand is due to announce its next cash rate position on January 31. The cash rate has been set at 2.5 per cent since March 2011 and, to date, economists have been expecting little change.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9382+0.0013+0.14%
    AUDUSD=X
    0.5574-0.0003-0.06%
    AUDGBP=X
    0.6780-0.0001-0.02%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg