Dollar level after ECB disappoints

DOLLAR regains losses after ECB disappoints investors with no immediate action to fight the euro zone debt crisis.

THE dollar has regained its losses after the European Central Bank (ECB) disappointed investors by deciding not to take immediate action to fight the euro zone debt crisis.

At 12pm AEST today, the local unit was trading at 104.76 US cents, virtually level with 104.77 cents yesterday.

Since 7am AEST today, the dollar has traded between 104.46 US cents and 104.75 cents.

RBC Capital Markets currency strategist Michael Turner said the dollar was volatile when European stocks took a hammering immediately after the ECB meeting and the bank's president Mario Draghi disappointed markets hoping for action on the euro zone debt crisis.

"Draghi didn't really deliver, so the Aussie came off the back of that," he said.

Mr Turner said the Aussie had regained some strength in morning trade, especially against the euro.

"There may be a little bit of hope that Australia can be disentangled from (the euro zone debt crisis) and the Aussie dollar has been performing pretty well."

All eyes will be on the US non-farm payroll data for July to be released tonight, Australian time, but there is uncertainty as to how the Australian dollar will react to the figures.

Mr Turner said a bad set of US jobs figures could increase expectation of a larger response by the US Federal Reserve to stimulate the American economy.

"It's hard to work out whether we're in that phase at the moment where bad US data is good for stocks," he said.

Meanwhile, the Australian bond market is firmer.

At 12pm AEST today, the September 10-year bond futures contract was trading at 96.995 (implying a yield of 3.005 per cent), up from 96.940 (3.060 per cent) yesterday.

The September three-year bond futures contract was at 97.470 (2.530 per cent), up from 97.390 (2.610 per cent).