The Australian dollar is a third of a US cent higher after the release of weak US housing data sparked concerns about the America’s economic recovery.

At 0700 AEST on Monday, the local unit was trading at 90.36 US cents, up from 90.03 cents on Friday.

On Friday, it was reported that US new home sales for July plunged 13.4 per cent, leading investors to believe that the US Federal Reserve’s will have to continue its economic stimulus program.

OM Financial senior client adviser Stuart Ive said the economic data was the main mover for markets during the offshore session on Friday.

“That set the tone initially, the US dollar weakened across the board,” he said.

“It was not only reflected in the currencies but in the commodity markets, gold spiked higher.”

Over the weekend, central bankers from around the world gathered for their annual symposium at Jackson Hole, Wyoming.

There was some discussion among the speakers over the potential winding back of Fed’s $US85 billion-a-month bond-purchasing program.

“Some the of the speakers said that the Fed should not pull back on its stimulus at this point in time and keep it going for a longer duration,” Ive said.

He added there would be a fair amount of volatility in currency markets ahead of the US Federal Reserve’s next policy meeting on September 17-18, when a decision on the tapering of the bond purchases could be made.

Ive expects the Australian dollar to trade in a range between 90.25 and 91.30 US cents.

AAP