The Australian dollar has remained below parity with the greenback as healthy American retail data underpinned strength in the US currency.
At 12pm AEST today the dollar was trading at 99.77 cents, down almost a quarter of a US cent from yesterday’s local close of 100 US cents.
The local unit fell last night and continued to struggle this morning after US Commerce Department data showed a retail sales jump of 0.1 per cent during April.
While the rise was unspectacular, it was more upbeat than market forecasts of a 0.3 per cent drop, boosting the US dollar against most major currencies.
“At the moment, the market's quite sensitive to any sort of positive US news,'' OzForex chief currency strategist Jim Vrondas said. “We've seen them get long buying US dollars.''
Still, Mr Vrondas said, the Australian dollar could briefly rise above parity with the US currency, to 101 US cents on Tuesday night, if Treasurer Wayne Swan's sixth budget is less draconian than financial markets expect.
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Recommended Coverage $A excuse running out of currency
WAYNE Swan may have to rank the high dollar a little lower on his long list of excuses for failing to return the budget to surplus. Hopes are high for dollar retreat
THE stockmarket was awash with fresh optimism that the dollar may finally be on a sustained decline. End of sidebar. Return to start of sidebar.
“The expectations are it's going to be relatively tough, but maybe not as tough,'' he said, adding that traders would “sell on a rally'' if the Australian dollar rose above 100 US cents.
The market has overlooked lending finance data for March, showing a 5.8 per cent rise in owner-occupier home loans.
Meanwhile, the Australian bond market was firmer at noon.
At 12pm AEST today the June 10-year bond futures contract was trading at 96.775 (implying a yield of 3.225 per cent), up from 96.750 (3.250 per cent) yesterday.
The June three-year bond futures contract was at 97.440 (2.560 per cent), up from 97.410 (2.590 per cent) previously.