Australian dollar up despite Europe concerns

THE Australian dollar was slightly higher at noon, despite dwindling risk appetite following downbeat news from Europe overnight.

THE Australian dollar was slightly higher at noon, despite dwindling risk appetite following downbeat news from Europe overnight.

At 1200 AEST today, the Australian dollar was trading at 104.47 US cents, up from 104.44 US cents yesterday.

Since 0700 AEST today, the local unit traded between 104.34 US cents and 104.86 cents.

RBC Capital Markets fixed income and currency strategist Michael Turner said the Australian dollar reacted negatively to a proposal by France and Germany to restore market confidence in the debt stricken eurozone.

France and Germany failed to reassure the market with the outcome of a meeting on eurozone debt, by not backing the idea of "eurobonds'' to pool the debts of the 17 eurozone members and insisting the bloc's existing 440 billion-euro ($A608.28 billion) bailout fund was "sufficient''.

Mr Turner said the announcement weighed on the local unit in morning trade.

"Aussie lost energy last night after the (Angela) Merkel and (Nicolas) Sarkozy statement,'' he said.

"There's not a huge amount of interest in the Aussie at the moment. People got a little bit cautious.''

He expects the local currency to trade in a tight range through the afternoon.

"I don't think we're going to be doing anything except tracking equities really,'' he said.

Meanwhile, the Australian bond market was firmer at noon.

The September 10-year bond futures contract was trading at 95.530 (implying a yield of 4.470 per cent), up from 95.495 (implying a yield of 4.505 per cent).

The September three-year bond futures contract was at 96.210 (3.790 per cent), up from 96.150 (3.850 per cent).