Dollar continues to fall

THE dollar was lower at noon, continuing its downward trend.

THE dollar was lower at noon, continuing its downward trend as traders unwind positions taken before the US central bank embarked on a second stimulus program.

At midday (AEDT) today, the dollar was trading at US97.68c, down from yesterday's close of US98.55c.

Since 7am, the local unit traded between US97.48c and US97.78c.

The local dollar has been trending lower ever since reaching a post-float high of US101.82c on November 8.

This was six days after the US Federal Reserve made the decision to buy $US600 million of government bonds to stimulate the economy, a policy known as quantitative easing (QE).

RBC Capital Markets senior currency strategist Sue Trinh said the dollar's fall had been due to a rising US dollar.

"What we're seeing across markets overall is an unwinding of the QE trade," she said.

"What we're seeing is US rates market selling off sharply.

"You're seeing US equities, which had rallied into the Fed's announcement, selling off sharply, commodities, Aussie dollar and most risk assets also coming off.

"To put in other words, in the FX markets, the US dollar is rallying right across the board.

Ms Trinh said the market would be focusing on US data this week for hints about whether the Fed will complete its second round of stimulus.

The US Consumer Price index, a key indicator of inflation, will be released tonight.

Ms Trinh expects the dollar to trade in a range of US97.40c and US98.15c this afternoon.

Meanwhile bonds were fairly flat at midday.

At noon on the ASX 24, the December 10-year bond futures contract was at 94.570 (implying a yield of 5.430 per cent), level with yesterday's close.

The December three-year bond futures contract was at 94.890 (5.110 per cent), up from 94.870 (5.130 per cent).