Dollar higher before RBA's board meeting

THE dollar was higher today, as the market waits on the results of the central bank's board meeting later in the day.

THE dollar was higher today, as the market waits on the results of the central bank's board meeting later in the day.

At midday (AEDT) today, the local unit was trading at US101.93c, up from US101.75c yesterday.

Since 7am, the dollar has traded between US101.77c and US102.00c.

Nomura chief economist Stephen Roberts said the local unit opened firmer and continued to perform strongly.

"There's been more risk appetite overnight, largely as a result of US equities and the signs of interests in US markets," he said.

"That reflected back into risk markets overnight and has helped the Australian dollar."

At 11.30am, the Australian Bureau of Statistics (ABS) reported a deficit of $7.299 billion in the December quarter from a downwardly revised deficit of $6.490 billion in the September quarter.

The median market forecast was for a deficit of $7 billion in the December quarter.

The ABS also released retail sales data, which showed spending had increased 0.4 per cent in January, 0.1 per cent better than the market was expecting.

The dollar only added around US0.1c following the data release.

Mr Roberts said currency traders were more focused on the central bank's board meeting, due at 2.30pm (AEDT) today.

While a cash rate rise is not expected, the wording of the RBA's statement could provide some short-term direction to the local unit, he said.

"There may be a slightly hawkish tint to the statement that comes with it so there may be a slight lift off the back of the statement."

Meanwhile, the bond market was weaker.

At midday today on the ASX 24, the March 10-year bond futures contract price was 94.465 (implying a yield of 5.535 per cent), down from yesterday's close of 94.500 (5.500 per cent).

The March three-year bond futures contract price was at 94.860 (5.140 per cent), down from 94.900 (5.100 per cent).