Aust dollar lower, bonds firmer

THE Australian dollar was trading near 104.5 US cents at noon, after a quiet morning with little news to push the currency one way or the other.

THE Australian dollar was trading near 104.5 US cents at noon, after a quiet morning with little news to push the currency one way or the other.

At 1200 today, the local currency was trading at 104.52 US cents, down from Wednesday's local close of 104.68 US cents.

The Australian dollar opened the local session at 0700 AEDT at 104.47 US cents and was largely unchanged during the morning, moving between 104.54 US cents and 104.44 US cents.

"We remain in very tight ranges waiting for further news flow from Europe," Deutsche Bank foreign exchange strategist John Horner said.

The Australian dollar has been one of the better performing currencies in the past month, having climbed about 2.2 per cent against the US dollar and two per cent against the Japanese yen.

The local unit was also up more than four per cent against the euro, in response to the banking crisis in Cyprus and the ongoing stalemate in Italy, which is yet to form government a month after elections were held.

"The Italian political stalemate was brought back to centre stage last night, particularly given the weakness of the bond auction there," Mr Horner said.

Mr Horner said he expected further euro weakness in the weeks ahead.

The Australian Bureau of Statistics' job vacancies figures, which came out a bit weaker than expected, had no impact on the currency, Mr Horner said.

Meanwhile, the Australian bond market was stronger at noon.

At 1200 today, the June 10-year bond futures contract was trading at 96.565 (implying a yield of 3.435 per cent), up from yesterday's local close of 96.470 (3.530 per cent).

The June three-year bond futures contract was at 97.140 (2.860 per cent), up from 97.020 (2.980 per cent) previously.