The Australian dollar closed three-quarters of a US cent higher, breaking through 91 US cents for a short while, after better-than- expected manufacturing data from China buoyed dealer sentiment.
At 1700 AEST on Monday, the Australian dollar was trading at 90.89 US cents, up from Friday's local close of 90.13 US cents.
Since 0700 AEST, the local unit traded between $US0.9046 and $US0.9106.
It later surged to 91.27 US cents in recent trade, and it was also buying 69.8 euro cents, 79.2 yen and 57.8 pence.
4Cast Financial Markets head of research Ray Attrill said Monday was a good day for the dollar.
The HSBC China Manufacturing PMI, or purchasing managers' index, fell to 49.4, the first time it dropped below the neutral 50 threshold since March 2009, HSBC reported over the weekend.
``While the numbers were still down, there seems to be enough of a relief that the numbers are not as bad as whispered,'' Mr Attrill said.
Tuesday's Reserve Bank of Australia (RBA) board meeting is expected to leave the cash rate unchanged at 4.5 per cent.
Mr Attrill said the accompanying statement from RBA governor Glenn Stevens issued after Tuesday's meeting would be watched closely by the market.
''It'll be looking for any hints or revisions to the RBA's medium-term growth and inflation forecasts,'' he said. ``I think that's where the sensitivity might come from.''
Meanwhile, the Australian debt market closed a touch weaker.
At 1630 AEST on Monday, the yield on the Commonwealth Government April 2020 bond was 5.026 per cent, down from Friday's close of 5.206 per cent, while the May 2013 bond was at 4.564 per cent, little changed from 4.565 per cent on Friday.
On the Sydney Futures Exchange, the September 10-year bond futures contract was at 94.770, down from Friday's close of 94.800, while the September three-year bond futures contract was at 95.320, down from 95.350.
While trading was thin on Monday (AEST), bonds were given a weak lead from the US on Friday (AEST), TD Securities senior strategist Annette Beacher said.
''They're wickedly flat,'' she said.
''You can thank the US for that. Even when equities have a really good day, bonds aren't selling off because US data has disappointed lately.''
''Bonds are anchored to the US.''
US stocks finished Friday flat, after the Commerce Department reported that US economic growth declined to 2.4 per cent in the second quarter, from a upwardly revised 3.7 per cent in the first three months of the year.
At 1630 AEST, the 90-day bank bill rate was at 4.760 per cent, down from Friday's close of 4.780 per cent, while the 180-day bank bill rate was at 4.890 per cent, down from 4.950 previously.
Due to a bank holiday in NSW and the ACT, the Reserve Bank of Australia's trade weighted index (TWI) had not been updated from Friday's 69.4.
AAP