Dollar heads up before Bernanke testimony

THE dollar ended the local session higher ahead of the US Federal Reserve Chairman Ben Bernanke's testimony on the economic outlook before the American Senate.

THE dollar ended the local session higher ahead of the US Federal Reserve Chairman Ben Bernanke's testimony on the economic outlook before the American Senate.

At 5pm AEDT, the local unit was trading at 100.30 US cents, up from 99.84 cents yesterday.

Since 7am AEDT, the Australian dollar traded between 100.52 cents and 100.18 US cents.

Dr Bernanke will testify in Washington DC before the Senate Banking Committee on the Dodd-Frank financial regulation reforms.

CMC Markets foreign exchange dealer Tim Waterer said the Australian dollar could be pushed higher if Dr Bernanke talks about quantative easing in his address.

"If there's any Fed talk about quantitative easing, if that comes up in conversation this evening, it will cause some US dollar (some) selling pressure," Mr Waterer said.

The Philadelphia Federal Reserve Manufacturing index in the US is also due out overnight and could effect sentiment.

Mr Waterer said the Australian dollar had benefited from US dollar weakness already in the wake of mixed US data and thin trading conditions.

"We saw the US dollar come off the boil overnight with offshore stocks trading in a positive fashion," he said.

"Those events lent themselves to the risk trade. Some of the data was good, some bad."

Industrial production in the US decreased 0.1 per cent in January 2011 after having risen 1.2 per cent in December, Bloomberg reported overnight.

In the manufacturing sector, US output increased 0.3 per cent in January after an upwardly revised gain of 0.9 per cent in December.

Meanwhile, US producer prices rose in January, the US Labour Department said.

The producer price index increased 0.8 per cent last month. 

A 6.9 per cent jump in gas prices pushed the index up. Food prices rose 0.3 per cent, less than many economists forecast.

Mr Waterer said those figures, coupled with thin trading conditions, gave the Australian dollar a strong boost at the start of domestic trade.

Mr Waterer said he expected the unit to trade between 99.95 US cents and 100.65 cents.

CURRENCY TABLE: Currency snapshot at 1700 AEDT

CURRENCY SPOT PREVIOUS CLOSE

AUD/USD 1.0028-31 0.9983-85 

AUD/JPY 83.80-84 83.58-64 

AUD/EUR 0.7387-93 0.7379-86 

AUD/NZD 1.3276-84 1.3235-41 

AUD/GBP 0.6223-29 0.6177-82 

EUR/USD 1.3569-72 1.3521-24 

USD/JPY 83.57-58 83.73-75 

EUR/JPY 113.40-43 113.21-25 

(*Closes taken at 1700 AEDT previous local session)

Sourcedata: IRESS

The RBA's trade weighted index (TWI) was at 75.0, up from Wednesday's close of 74.8.