Dollar down as traders switch to greenback

THE dollar was softer today off the back of US dollar strength and profit taking.

THE dollar was softer today off the back of US dollar strength and profit taking.

At noon (AEDT), the local unit was trading at US99.79c, down from US100.42c yesterday.

Since 7am, the dollar traded between US99.45c and US99.81c, according to Iress data.

Rochford Capital senior foreign exchange consultant Derek Mumford said the dollar was still fundamentally strong, but had lost value today, as traders invested in the US dollar.

"We've also seen a slightly weaker euro and a weaker yen, and this is causing profit taking in the Aussie dollar," Mr Mumford said.

"Fundamentals around the Aussie are still quite strong, but perhaps there are still questions over inflation and the sustainability of what's happening in commodity and equity markets."

The local unit had been struggling to make much headway above US101c in past week, he said.

"I think it's getting to the stage where people are looking for a bit of a correction."

He expected the domestic currency to sell up towards parity and didn't see it going past US100c for the remaining session today.

The dollar could continue to lose ground in the week, softening to around US98c, Mr Mumford added.

Meanwhile, the bond market was slightly firmer at midday.

At noon (AEDT) on the ASX 24, the March 10-year bond futures contract price was 94.295 (implying a yield of 5.705 per cent), up slightly from yesterday's close of 94.285 (5.715 per cent).

The March three-year bond futures contract price was at 94.750 (5.250 per cent), up from 94.730 (5.270 per cent).