Dollar close to parity, rebounding on retail

THE dollar was trading close to parity with the US dollar at midday, after coming under pressure in early morning trade.

THE dollar was trading close to parity with the US dollar at midday (AEDT), after coming under pressure in early morning trade and later rebounding on a slight rise in retail sales.

At midday today, the local unit was trading at US99.72c, up from US99.29c on Friday.

Since 5pm on Friday, the dollar has traded between US99.26c and US99.74c.

Retail sales rose slightly in November, but economists say the data shows the Australian economy is slowing down thanks to interest rate rises and consumer conservatism.

RBC Capital Markets economist Michael Turner said the local unit rose about 15 points on the release of the data.

"The Australian dollar opened a bit weaker this morning following on from the poor sentiment over European debt and... from Friday night when we saw a pretty soft payrolls number, and then it chopped around a bit," Mr Turner said.

"It poked up a bit higher on the retail sales data. I think tomorrow's trade data will be pretty important, as well."

The US Labor Department reported a sharp fall in the unemployment rate in December to 9.4 per cent but, at the same time, the economy created 103,000 jobs, many fewer than the 150,000 forecast by analysts.

Germany yesterday denied a report saying it planned, together with France, to press Portugal to seek a bailout in order to stop Spain and Belgium from becoming the next euro crisis casualties.

German news weekly Der Spiegel also had reported that Paris and Berlin want members of the 17-country eurozone to state that they are ready to do whatever it takes to save the currency union, including expanding a 750 billion euros ($982.64 billion) rescue fund.

The local currency is expected to trade around parity this afternoon.

Meanwhile, at midday on the ASX 24, the March 10-year bond futures contract price was 94.425 (implying a yield of 5.575 per cent), up from Thursday's close of 94.360 (5.640 per cent).

The March three-year bond futures contract price was 94.830 (5.170 per cent), slightly up from 94.790 (5.210 per cent).