Dollar slightly higher following parity bid

THE dollar rose slightly during quiet morning trade following an unsuccessful overnight bid to reach parity.

THE dollar rose slightly during quiet morning trade following an unsuccessful overnight bid to reach parity.

At midday (AEDT), the local unit was trading at US99.68c, up slightly from yesterday's close of US99.63c.

The currency last exceeded $US1 on December 14.

Since 7am, the local unit traded in a narrow range between US99.59c and US99.63c.

IG Markets research analyst Ben Potter said there were several sellers and not many buyers around the level of parity.

"There aren't that many buyers," Mr Potter said.

"Mostly, the high yields on the interbank market are drying up heading in to Christmas.

"People just aren't doing big business transactions in big parcels of currencies."

Parity mark was still a big psychological level, he said.

"I just don't think the Australian dollar has the impetus to push as high."

Mr Potter said the US dollar strengthened overnight while the euro fell away.

Financial companies led Wall St higher today after another big banking deal raised hopes that more acquisitions could be on the way.

Europe's main share markets climbed, with London's FTSE 100 index of top shares gaining 1 per cent.

Meanwhile, ratings agency Moody's has warned it may lower by one or two notches Portugal's A1 rating owing to uncertainty about growth and borrowing prospects, but said it expected Lisbon to be able to pay its debts.

Wall Street stocks closed higher amid light trading, with markets boosted by strong earnings from firms including software giant Adobe.

Mr Potter predicted the local unit would trade in a very tight range during the afternoon with "no real incentives" to push higher.

"You've got coal and iron ore prices supporting the Aussie but it's really struggling to move higher, in the short-term at least, until we get some more volume back into the market," Mr Potter said.

"I think the currency's going to trade sideways during the afternoon."

The bond market was firmer at midday.

At midday on the ASX 24, the March 10-year bond futures contract was at 94.375 (implying a yield of 5.625 per cent), up from yesterday's close of 94.370 (5.630 per cent).

The March three-year bond futures contract was at 94.680 (5.320 per cent) steady with yesterday's close.