Dollar flat at noon as oil rises

THE dollar was flat as investors preferred to stay on the sidelines amid ongoing turmoil in the Middle East and rising oil prices.

THE dollar was flat at noon (AEDT) as investors preferred to stay on the sidelines amid ongoing turmoil in the Middle East and rising oil prices.

At midday (AEDT), the local unit was trading at US101.36c, little changed from Friday's local close of US101.41c.

Since 7am, the dollar has moved between a high of US101.58c and and a low of US101.30c.

The unit opened the local session at US101.33c at 7am and attempted to move higher through the morning, but struggled to build enough momentum to break beyond US101.6c.

Rochford Capital senior consultant of FX advisory services Derek Mumford said dollar trading reflected uncertainty in the market.

"It's not risk aversion, but it is just an unwillingness to take on further risk at these levels," Mr Mumford said.

"I do think there's enough demand below US101c from Asian sovereign funds to buy the Aussie dollar though, which is keeping it from any substantial correction."

Local economic data published this morning was mixed, and equity markets were down about 0.7 per cent at lunchtime.

Construction activity contracted for the ninth straight month in February, but job advertisements posted the 10th consecutive month of growth.

Mr Mumford said the jobs data, which was published by ANZ, supported the view that the Reserve Bank of Australia (RBA) would resume interest rate rises later in the year.

"It is still showing fairly strong growth, which is to be expected, so I think the pressure will gradually build on the RBA to increase interest rates again towards the end of the year," Mr Mumford said.

"If that employment growth does start to feed through into wages growth, then I think they will be under pressure. They want to stay ahead of the curve, which is their stated intent."

The RBA's last rate rise was in November 2010, when the board delivered a 25 basis point hike that took the cash rate to 4.75 per cent.

Crude oil prices touched their highest levels since September 2009 during US trading over the weekend, and Wall Street closed lower.

Meanwhile, the local bond market was firmer at noon.

At midday on the ASX 24, the March 10-year bond futures contract price was 94.450 (implying a yield of 5.550 per cent), up from Friday's close of 94.410 (5.590 per cent).

The March three-year bond futures contract price was 94.880 (5.120 per cent), up from 94.840 (5.160 per cent).