Dollar slightly higher in quiet trade

THE dollar was slightly higher in a quiet morning of trade a week before Christmas.

THE dollar was slightly higher in a quiet morning of trade a week before Christmas.

At 7am (AEDT), the local unit was trading at US99.09c, up from yesterday's close of US98.62c.

Since 7am, the local unit traded in a tight range between US98.90c and US99.14c.

Commonwealth Bank currency strategist Joe Capurso said the dollar rose slightly in quiet trade.

"Traders are starting to go on holidays, customers are doing less as well, so liquidity is starting to thin out.

"There is no economic data in the region."

European Union leaders will continue their summit tonight (AEDT) after agreeing overnight to the creation of a permanent rescue fund for eurozone countries in crisis.

Mr Capurso said the market would be focusing on the summit to see if they agree to increase the bailout package or issue joint bonds.

"Germany has said quite publicly and repeatedly the answer is no," he said.

"If there is going to be any market reaction to the EU leaders meeting it's going to sell the euro.

"It is just going to show that they're not agreeing to add more help and that is just going to put more downward pressure on the Aussie dollar, he said.

For the rest of the local session, Mr Capurso expect the local unit to trade in a range between a high of US99.13c, with lows down towards US98.50c.

The bond market was stronger at midday.

At midday on the ASX 24, the March 10-year bond futures contract was at 94.365 (implying a yield of 5.635 per cent), up from today's close of 94.295 (5.705 per cent).

The March three-year bond futures contract was at 95.710 (4.290 per cent), up from 95.660 (4.540 per cent).