Ongoing speculation about economic stimulus in China is fuelling demand for the Australian dollar, keeping it near a four month high.

At 1200 AEDT on Wednesday, the local unit was trading at 91.60 US cents, up from 91.23 cents on Tuesday.

The currency hit a four-month high of 91.76 US cent during early morning trade.

Driving the Aussie’s rise is speculation that Chinese policy makers are considering stimulus measures to sustain jobs and growth following a string of weak economic data, OZForex chief currency strategist Jim Vrondas said.

There are hopes China’s central bank will reduce the amount of cash banks are required to hold in reserve, in order to free up more funds for borrowing.

“Talk of more stimulus out of China is an underlying theme that seems to be driving up markets,” he said.

“This will likely last at least the week. I can’t see the China story changing in a hurry unless we get some surprised good prints on the Chinese PMI next week.”

The Chinese government’s non-manufacturing growth figures and HSBC’s China services purchasing managers index (PMI) are due out on April 3.

Traders will closely look for cues from RBA governor Glenn Stevens’ speech in Hong Kong, due later on Wednesday.

Meanwhile, Australian bond futures prices are firmer.

At 1200 AEDT on Wednesday, the June 2014 10-year bond futures contract was trading at 95.875 (implying a yield of 4.125 per cent), up from 95.865 (4.135 per cent) on Tuesday.

The June 2014 three-year bond futures contract was at 96.960 (3.040 per cent), up from 96.950 (3.050 per cent).