Dollar higher as investors tip risk assets

THE dollar was US0.5c higher at noon as investors favoured risk assets such as the local currency.

THE dollar was US0.5c higher at noon as investors favoured risk assets such as the local currency.

At midday today, the dollar was trading at US98.98c, up from yesterday's close of US98.54c.

Since 7am, the local unit traded between US98.75c and US99.13c.

IG Markets institutional trader Chris Weston said the local unit continued to be supported in morning trade.

European equities climbed on expectations that the Irish government will receive a bailout from the European Union (EU) and International Monetary Fund (IMF) for its banks.

"We are just pushing up around the US99c and we're very much at the mercy of what's happening in Europe," Mr Weston said.

"What we're seeing in Europe at the moment seems to be a short term reprieve."

Ireland could receive "tens of billions" of euros as part of an EU/IMF bailout, the head of Ireland's Central Bank said yesterday as an international mission of experts arrived in the country.

The bank's governor, Patrick Honohan, said it was his "expectation" that a "very substantial loan, tens of billions" would be made to prop up Ireland's crisis-hit economy.

Mr Weston said the dollar still had strong fundamentals.
"People will want to buy on dips," he said.

"If we see it coming back below US97c then people will be looking to buy it."

The Dow Jones industrial average jumped more than 180 points in late afternoon trading, following European markets higher.

Markets will be on alert for any announcement from China, with rumours during the week that a tightening would be announced today.

With no local data due today, traders await US Fed chairman Ben Bernanke's keynote speech at the ECB Conference in Frankfurt, where the panel discussion will include the ECB president.

Mr Weston expects the local unit to trade in a tight range for the rest of the local session.

"There's still a positive bias for the Aussie in the short term," he said.

Meanwhile, the bonds market was weaker at noon.

At midday on the ASX 24, the December 10-year bond futures contract was at 94.450 (implying a yield of 5.550 per cent), down from yesterday's close of 94.490 (implying a yield of 5.510 per cent).

The December three-year bond futures contract was at 94.770 (5.230 per cent), down from 94.810 (5.190 per cent).