The Australian dollar is trading near one-year lows as pessimistic traders stay out of high-risk, high-yield assets.
At 1200 AEST on Monday, the local unit was trading at 96.29 US cents, down from 96.79 cents on Friday.
Since 0700 AEST on Monday, the Australian dollar traded between 96.16 US cents and 96.58 cents.
Local markets were weighed down last week by the release of weak manufacturing data from China, which showed activity in the sector started to fall in May.
The Australian dollar was also not helped when minutes of the most recent US Federal Reserve policy meeting showed there was discussion about winding down its economic stimulus program, which helped the US dollar to rally.
CMC Markets senior trader Tim Waterer said the Australian dollar has kicked off a new week on a down note, because that negativity has continued across Asian equity markets.
“We’ve got the Nikkei trading down a few per cent and the ASX200 is putting in a fairly uninspired performance,” he said.
“It does seem to be a continuation of those risk averse themes from last week, which have carried forward into the new week and that’s hurting some of the risk-sensitive currencies like the Australian dollar.
“There is really nothing that is providing a buying catalyst for the currency at the moment.”
Mr Waterer said the dollar’s movement over the next few days will be driven by the direction of commodity prices and overseas markets especially the Japanese and Chinese stock markets.
“Obviously gold and oil prices are under some pressure and that’s affecting commodity currencies like the Australian dollar,” he said.
On Thursday, the Australian Bureau of Statistics will release business investment figures for the March quarter and expected expenditures for the coming years, which will be of key interest to investors.
Mr Waterer expects the Australian dollar to trade in a range between 95.85 US cents and 95.60 cents on Monday afternoon.
Meanwhile, Australian bond futures prices were higher at noon.
At 1200 AEST on Monday, the June 10-year bond futures contract was trading at 96.710 (implying a yield of 3.290 per cent), up from 96.690 (3.310 per cent) on Friday.
The June three-year bond futures contract was at 97.410 (2.590 per cent), up from 97.400 (2.600 per cent).
