Dollar higher after good overnight session

THE dollar was higher at noon today following a solid overnight trading session.

THE dollar was higher at noon today following a solid overnight trading session.

At midday (AEDT), the local unit was trading at US99.13c, up from US98.70c yesterday.

Since 5pm yesterday, the dollar traded between US98.61c and US99.67c.

CMC Markets foreign exchange dealer Tim Waterer said the local unit cooled off today after spiking overnight.

"Liquidity was a bit thinner than normal which did exaggerate some of the moves overnight," Mr Waterer said.

"So an argument could be made that it perhaps went a bit higher than it was entitled to and that contributed to why it declined somewhat today back to that US99c mark."

Traders looked to invest in the Aussie after an overnight sell-off of the euro, he said.

"With the euro coming off the boil, traders were looking elsewhere and the Aussie looked to be decent value."

Mr Waterer added that currency traders were waiting on possible inflationary impacts of the Queensland floods and whether it may prompt the Reserve Bank of Australia (RBA) to hike the cash rate.

"Whilst it's unlikely, it's not completely out of the question that the RBA may have its hand forced in the first half of this year to look at raising rates to keep a lid on inflation."

He expected the local currency to trend lower today and possibly slip below 99 cents as traders waited for the Shanghai Stock Exchange to provide a lead.

Meanwhile, at midday on the ASX 24, the March 10-year bond futures contract price was 94.460 (implying a yield of 5.540 per cent), up from yesterday's close of 94.440 (5.560 per cent).

The March three-year bond futures contract price was 94.870 (5.130 per cent), slightly higher from 94.860 (5.140 per cent).