Dollar eases, but still higher at noon

THE Australian dollar had slipped back from its two-week overnight peak of 106.00 US cents at noon, although it still was higher, as sluggish equity markets looked for leads.

THE Australian dollar had slipped back from its two-week overnight peak of 106.00 US cents at noon, although it still was higher, as sluggish equity markets looked for leads.

At 1200 AEST today, the Australian dollar was trading at 105.15 US cents, up from 104.78 US cents yesterday.

Since 0700 AEST today, the local unit traded between 105.02 US cents and 105.60 US cents.

Easy Forex currency dealer Tony Darvall said the Australian dollar had followed US and Asian equity markets lower during the domestic session.

"We've had a little bit of heaviness now in stocks and this is taking risk off the table," Mr Darvall said.

"Because we've had a pretty good run for the last couple of days, the market is pulling back.

"You are seeing this across not just the Aussie (dollar), but also the euro and the British pound."

US stocks gave up early gains to close little changed yesterday , while European stock markets mostly were firmer in quiet holiday trade.

Markets in China, Hong Kong, Singapore and Tokyo all were lower at noon on a lack of fresh leads.

Mr Darvall said there was little economic data of any significance today.

He said US housing data due tonight may offer some influence, but it would be overshadowed still by general market sentiment.

The Australian dollar was likely to trade in a range between 105.00 and 105.60 US cents for the remainder of the day, he said.

Meanwhile, the Australian bond market was firmer at noon.

The September 10-year bond futures contract was trading at 95.595 (implying a yield of 4.405 per cent), up from 95.505 (4.495 per cent) yesterday.

The September three-year bond futures contract was at 96.260 (3.740 per cent), up from 96.190 (3.810 per cent).

RBC Capital Markets fixed income strategist Michael Turner said Australian bonds had tracked US Treasuries higher at the long end of the yield curve.

"Ten year (futures) are a bit firmer, just in line with that rally in the US last night," he said.

US Treasuries ended mixed, with the long end finishing firmer after equity markets lost ground late in the Wall Street session.