Dollar lower on Europe worries

THE dollar was trading slightly lower at noon today as investors sold riskier assets such as the euro and the local currency.

THE dollar was trading slightly lower at noon today as investors sold riskier assets such as the euro and the local currency.

At noon the dollar was trading at 96.38 US cents, down from Friday's close of 97.68 US cents.

Since 7.00am (AEDT) today the local unit traded in a range between 96.13 US cents and 97.12 US cents.

Royal Bank of Scotland FX strategist Greg Gibbs said nervous investors allowed the local unit to trade "more or less in line with the euro."

"It was up early and then down and now basically trading below where it closed in New York, which was a bit of a worry," Mr Gibbs said.

"I would suggest the market remains in risk aversion mode.

"The main factor appears to be what's happening in Europe."

EU Governments yesterday approved an €85 billion ($115.59 billion) bailout for Ireland to help it withstand the weight of its banking crisis.

According to a statement released by the Irish Government, the country will take €10 billion immediately to boost the capital reserves of its banks.

Another €25 billion earmarked for the banks will remain in reserve.

US stocks markets fell on Friday, with holiday-thinned rank of traders taking their cue from European markets.

Mr Gibbs said traders were waiting on new information from Europe.

"If anything, the news should be better (with details emerging of) the Irish package.

"I guess that wasn't anticipated and the market's pretty nervous."

Mr Gibbs said the local unit lost ground after an unexpected fall in business inventories which could most likely contribute to a negative GDP reading in the December quarter.

"I think the market's pretty nervous at the moment," Mr Gibbs said.