A RALLY on Chinese equity markets has helped the Australian dollar to recover from a three-month low.
At 5pm, Sydney time, yesterday, the Australian dollar was trading at US103.05c, up from 102.82c yesterday.
ANZ foreign exchange strategist Andrew Salter said that, after several days of falls, the currency had received some support from Chinese stock markets, which reopened after three days of public holidays.
"We've found a base in the Asian session today," he said.
"The main support has been Chinese equity markets, they have opened up strongly after three days of public holidays."
He said the Chinese markets were rallying on better than expected manufacturing data released last weekend.
The Shanghai Composite Index at 5pm, Sydney time yesterday, was 1.76 per cent higher than its previous close.
The Australian dollar fell sharply this week on weaker than expected trade data and signs the country's central bank will cut the official interest rate as early as next month.
Data released on Wednesday showed Australia's trade balance remained in deficit in February, despite widespread expectations of a return to surplus.
On Tuesday the Reserve Bank of Australia announced it would keep the cash rate on hold at 4.25 per cent for April but indicated it could cut in May if quarterly consumer price index (CPI) data, due to be released later this month, showed inflation remains within its target band.
Mr Salter said the key event for the Australian dollar over the Easter weekend would be the release of US non-farm payroll data on Good Friday.
Economists are expecting the data to show a rise in employment of more 200,000.
"If we get anything upwards of 180,000 (jobs created), that's going to be a positive and will support the Aussie dollar," he said.
