Dollar higher as RBA minutes come out

THE dollar rose US0.5c toward parity as equities firmed and the central bank released the minutes of its latest board meeting.

THE dollar rose US0.5c toward parity as equities firmed and the central bank released the minutes of its latest board meeting before midday.

At midday (AEDT), the local unit was trading at US99.32c, up from yesterday's close of US98.79c. The currency last exceeded $US1 on December 14 after rising over parity for the first time in October.

Since 7am, the local unit traded between US99.19c and US99.42c.

Minutes from the latest Reserve Bank of Australia (RBA) board meeting show restraint in household consumption and borrowing allowed the central bank to keep the cash rate on hold in December.

The local unit lost about one tenth of a cent immediately after the release of the December minutes, before rebounding to the day's high.

JP Morgan economist Helen Kevans said the range of the local currency had been narrow in the absence of any significant domestic data.

"The reaction of the Aussie was pretty muted," Ms Kevans said.

"It's pretty steady.

"There was very little news overnight and until the minutes there was very little happening locally so it was not surprising that it has barely budged over the course of the day."

The RBA minutes showed the bank considered the current cash rate to be appropriate.

The board also noted that household consumption and borrowing was restrained despite high levels of confidence, and there was a noticeable increase in the rate of household savings.

In the absence of any significant local or offshore data, the local unit would trade around its current level, Ms Kevans said.

"There's really not much happening offshore.

"We have a few central bank decisions coming out on Wednesday and that could provide a bit of support for the Aussie."

The bond market was weaker at midday.

At midday on the ASX 24, the March 10-year bond futures contract was at 94.385 (implying a yield of 5.615 per cent), down from yesterday's close of 94.430 (5.570 per cent).

The March three-year bond futures contract was at 94.700 (5.300 per cent), down from 94.730 (5.270 per cent).