Dollar slightly lower as US dollar rises

THE dollar was slightly lower as the US dollar strengthened despite uncertainty in Europe.

THE dollar was slightly lower as the US dollar strengthened despite uncertainty in Europe.

At midday (AEDT), the local unit was trading at US98.77c, slightly down from Friday's close of US99c.

Since 7am, the local unit has traded in a tight range between US98.65c and US98.99c.

Easy Forex currency dealer Tony Darvall said the local currency came under pressure from a stronger US dollar over the weekend.

"There's been some strong selling this morning with a little bit of concern that the situation in North Korea could flare up on talk about a United Nations security council meeting," Mr Darvall said.

"And concerns remain in Europe over the situation in Ireland."

On Friday night (AEDT), Moody's Investors Service slashed its credit rating for Ireland by five notches from Aa2 to Baa1, due to increasing uncertainties over the debt-stricken country's economy and finances.

Over the weekend, the dollar breached the 75.00 euro-cent mark, hitting its highest levels since the euro began trading in January 1999.

It was trading at 75.2 euro cents at midday.

Mr Darvall predicted that the local unit would continue to come under pressure from the US dollar, while maintaining strength against the US dollar.

"The Eurozone is a basket case at the moment," Mr Darvall said.

He expects the Australian dollar to trade between US98.65c and US98.99c.

Tomorrow, the Reserve Bank of Australia (RBA) releases the minutes of its December 7 monetary policy meeting, when it kept the cash rate on hold at 4.75 per cent.

The bond market was weaker at midday.

The March 10-year bond futures contract was at 94.405 (implying a yield of 5.595 per cent), up from Friday's close of 94.365 (5.635 per cent).

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