Dollar down following French downgrade

THE dollar was weaker at noon (AEDT) as the market absorbed the news of the credit downgrade of some of Europe's biggest economies.

THE dollar was weaker at noon (AEDT) as the market absorbed the news of the credit downgrade of some of Europe's biggest economies.

S&P on Friday downgraded nine eurozone economies, including France and Austria, which were stripped of their top-notch AAA ratings.

The ratings agency also warned that Italy, the third largest economy in the euro area, faced a further downgrade from A to BBB+.

At 5pm (AEDT) today, the dollar was trading at 102.79 US cents, down from 103.30 cents on Friday prior to France's downgrade.

National Australia Bank currency strategist Emma Lawson said the downgrades added to concerns about the European Unions's ability to find a way through its debt crisis.

Ms Lawson said traders were particularly concerned about the effect on the European Financial Stability Facility (EFSF) - the rescue fund to combat the crisis.

"More particularly, there is concern about the implication that that has for the EFSF and a possible rating downgrade there," she said.

Ms Lawson said data released by ANZ Bank, showing a 0.9 per cent drop in job advertisements in December - indicating a weakening employment sector, helped to send the Australian dollar lower.

"The market knows that we are likely to see a softer employment outlook this year, so it (the ANZ data) didn't drive it a long way.

"We have seemed to recover somewhat this afternoon but generally the tone is lower."

Ms Lawson said trading volumes were thin in the lead up to the Martin Luther King public holiday in the US today.

She said events in Europe would again dominate overnight trade, with renewed concerns about Greece's ability to gain necessary funding.