Dollar higher at noon

THE Australian dollar was up as stronger-than-expected economic data lowered the chances of more interest rate cuts from the RBA.

THE Australian dollar was higher at noon as stronger-than-expected economic data lowered the chances of more interest rate cuts from the Reserve Bank.

The currency reached intra-day highs after official figures showed retail sales climbed 1.3 per cent in February while building approvals rose 3.1 per cent.

Both figures came in well above market expectations and pushed the Australian dollar to 104.89 US cents shortly after the data was released at 11.30am AEDT, from 104.6 US cents shortly beforehand.

JP Morgan chief economist Stephen Walters said the dollar's rise reflected investors' beliefs that the data had reduced chances of more RBA rate cuts.

"The higher the currency goes, the more pressure there is on the Reserve Bank to lower the cash rate to offset that," Mr Walters said. "But that's very unlikely when you get the data this strong."

The Australian dollar retreated slightly after the initial spike and at 12pm AEDT it was at 104.79 US cents, up from yesterday's local close of 104.58 US cents.

Meanwhile, the Australian bond market was firmer at noon, although gains were pared back after the ABS data.

At 12pm AEDT, the June 10-year bond futures contract was trading at 96.580 (implying a yield of 3.420 per cent), up from yesterday's close of 96.555 (3.445 per cent).

The June three-year bond futures contract was at 97.100 (2.900 per cent), up from 97.080 (2.920 per cent) previously.