Dollar marginally higher in quiet trade

THE dollar was marginally higher at midday, trading in a tight range in a quiet start to the week.

THE dollar was marginally higher at midday, trading in a tight range in a quiet start to the week.

At midday (AEDT), the local unit was trading at US98.50c, up from Friday's close of US98.48c.

Since 7am, the local unit traded in a range between US98.35c and US98.57c.

Commonwealth Bank currency strategist Joseph Capurso said the dollar was slightly higher in quiet trade.

"It's moved up a little bit, but you can't read much into it," he said.

Mr Capurso said the medium term global economic conditions were still good for the dollar.

"You've got more optimism about the US economy, you've got a fair bit of optimism about the Chinese economy," he said.

"They're the two biggest economies and, if they're doing well then, there should be a fair bit of demand for commodities, so that is usually beneficial for the Aussie.

"We think the Aussie dollar should track higher over the next few months, going over parity again to about probably $US1.02 or $US1.03.

"But for this week I suspect it will stay below parity."

Mr Capurso said the market focus this week would be the US Federal Reserve monetary policy meeting, which finishes up on Wednesday morning (AEDT).

"I suspect they might be a little bit more upbeat and that might give a bit of support to US bond yields and the US dollar."

He expects the dollar to track a little bit lower for the rest of the day, but doesn't expect it to go below the 98.00 US cent mark.

The bond market was weaker at midday.

At midday on the ASX 24, the December 10-year bond futures contract was at 94.350 (implying a yield of 5.650 per cent), down from Friday's close of 94.395 (5.605 per cent).

The December three-year bond futures contract was at 94.790 (5.210 per cent), down from 94.850 (5.150 per cent).