Australian dollar declines

The Australian dollar has fallen slightly Tuesday, buying 71.12 US cents from 71.25 US cents on Monday.

On Monday, the local currency has edged higher for a second session after some surprisingly good news on the Chinese economy buoyed stocks and commodities across the Asian region.

The Aussie crept to 71.22 US cents, away from last week’s low of 70.63.

It firmed after a survey showed factory activity in China unexpectedly grew for the first time in four months in March, suggesting government stimulus may be starting to take hold.

The official Purchasing Managers’ Index (PMI) rose to 50.5 in March from February’s three-year low of 49.2.

At home, a closely watched measure of Australian business conditions rose in March led by gains in sales and profits, though confidence weakened further to stay below average.

NAB’s index of business conditions, released on Monday, rose three points to seven, while confidence dipped two points to zero.

Crucially for the Reserve Bank of Australia, the survey’s measure of employment rose two points to a firm seven, suggesting the labour market remained upbeat.

Policy makers are counting on resilience in employment to help offset softness in house prices and incomes.

Figures from property consultant CoreLogic out on Monday showed home prices nationally fell 0.6 percent in March, from February, the smallest monthly fall since October. Values were down 6.9 percent on a year earlier.

The weakness in home prices is a major reason financial markets are wagering the central bank will have to cut rates this year, possibly as soon as August.

The RBA also holds its March policy meeting on Tuesday and is considered almost certain to keep rates at 1.5 per cent, where they have been since mid-2016.

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