The Australian dollar is lower after its post Chinese manufacturing data rally ran out of steam.
At 1200 AEST on Friday, the local unit was trading at 92.38 US cents, down from 92.65 cents on Thursday.
Overnight, the currency peaked at 92.75 US cents, after a HSBC survey on Thursday showed that Chinese manufacturing activity hit a five month high in May.
FXCM market analyst David de Ferranti said the Australian dollar then lost ground as a rally in the US dollar weighed on most major currencies.
“While yesterday’s China data provided the Aussie a jolt, traders have been left to question what could push it higher,” he said.
“At the same time, there’s still a lot of buying support at the 92 US cent figure, which needs to be cleared before the Aussie can take its next leg lower.”
Mr de Ferranti said one of the factors supporting the Australian dollar in recent months has been the lack of volatility in currency markets, which could end.
“The Aussie’s high-yield status is always a source of temptation for traders who are on the hunt for yield,” he said.
“While it remains to be seen what could cause volatility to surge, it’s unusual that it has remained so low for so long, and its eventual return would put pressure on the currency.”
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Meanwhile, Australian bond futures prices were lower.
At 1200 AEST on Friday, the June 2014 10-year bond futures contract was trading at 96.200 (implying a yield of 3.800 per cent), down from 96.255 (3.745 per cent) on Thursday.
The June 2014 three-year bond futures contract was at 97.160 (2.840 per cent), down from 97.190 (2.810 per cent).
