$A recovers losses as optimism returns The Australian dollar has bounced back as worries about debt problems in China fade and on improved optimism about the American economy. At 1200 AEDT on Monday, the local unit was trading at 96.04 US cents, almost unchanged from 96.05 cents on Friday. At the end of last week the Australian dollar fell as low as 95.72 US cents after a report showed there was a significant increase in the amount of bad debt being written off by the Chinese central bank. There were also concerns that interest rates in China will rise as the central bank reduces the amount of funds available for lending. However, Westpac chief currency strategist Robert Rennie said those fears faded during the US session on Friday and market optimism returned. "I think US equities closing at a fresh record high is a positive for the Australian dollar," he said. I think it is an improved mood, with the weaker US dollar, and stronger equity markets, Mr Rennie said there was also more optimism that any changes to government policy in China won't weigh on economic growth. The Chinese Communist Party's central committee meets in November and is expected to make more free market reforms. All eyes this week will be on the outcome of the US Federal Reserve's two-day policy meeting, which finishes on Thursday morning, Australian time, where a decision on winding down its economic stimulus program is expected to be made. The Reserve Bank of New Zealand meets on Thursday where is is expected to shy away from recent indications that it will increase its interest rate for the first time in three years. Meanwhile, bond futures prices were weaker. At 1200 AEDT on Monday, the December 10-year bond futures contract was trading at 96.050 (implying a yield of 3.950 per cent), down from 96.065 (implying a yield of 3.935 per cent) on Friday. The December three-year bond futures contract was at 96.960 (3.040 per cent), down from 96.970 (3.030 per cent).