Dollar closes lower after slow drift

THE dollar has closed lower after drifting lower for most of the local session amid quiet conditions as traders looked.

THE dollar has closed lower after drifting lower for most of the local session amid quiet conditions as traders looked ahead to the release of a key US jobs report later this week.

At 5pm (AEDT), the dollar was trading at 103.22 US cents, down from yesterday's local close of 103.53 US cents.

During the day, the local currency moved between a low of 103.13 US cents and a high of 103.73 US cents, according to IRESS data.

The dollar opened at 103.66 US cents, and moved back towards 103 US cents after a lacklustre finish on Wall Street and a sluggish start on regional equity markets.

OzForex corporate dealer Michael Judge said the release of the nation's latest trade balance, as well as data on activity in the services sector both in Australia and in China, had little impact on currency markets.

Instead, market players had turned their attention to the upcoming release of the US non-farm payrolls report - a key employment indicator - for December due out on Friday night (AEDT).

"All eyes are basically on the non-farm payrolls data out of the US," Mr Judge said.

"I guess that is going to answer to some degree not only has the US turned the corner but whether it is going to be sustained."

The local currency touched 80.14 euro cents, at 9.04am (AEDT) today, the highest since the introduction of the European unit in 1999 as ongoing concerns about the unfolding sovereign debt crisis left the euro under pressure.

However, by noon the dollar had dropped back below the 80 euro cent level.

"It's been a lacklustre session," Mr Judge said.

During last night's (AEDT) offshore session, the ADP private sector employment report for December, as well as figures on the number of people in the US on unemployment benefits, were due to be released.

The two pieces of data would help market players prepare for the release of the US non-farm payrolls report.

The Reserve Bank of Australia's (RBA) trade weighted index was at 76.7, down from 76.8 yesterday.