Dollar higher despite RBA minutes dip

THE dollar was higher at noon after gaining overnight amid easing concerns over European sovereign debt.

THE dollar was higher at noon after gaining overnight amid easing concerns over European sovereign debt.

Overnight, Irish officials said the government was in contact with "international colleagues" over its debt crisis but denied seeking a bailout.

This morning, the local unit fell almost US0.2c after the release of the Reserve Bank of Australia (RBA) minutes.

At 11.33am, the dollar was trading at US98.21c, down from US98.39c before the minutes were released at 11.30am.

The RBA said strengthening economic activity and gradually rising inflation were key factors in the central bank's decision to lift the cash rate in November.

The minutes also reveal the board took into consideration that bank lending rates could increase by more than the cash rate.

The RBA raised the cash rate by 25 basis points to 4.75 per earlier this month.

By noon, the dollar was trading back up to US98.42c, up from yesterday's close of US98.18c.

Since 7am, the local unit traded between US98.20c and US98.58c.

Nomura Australia chief economist Stephen Roberts said the RBA minutes weren't overly dovish.

"They indicated they waited, waited and waited before they lifted rates in line with their expectations about what's going to happen next year," he said.

"Eventually they couldn't wait any longer when they got to November.

After its overnight gains, the local unit fell steadily through the morning on profit taking.

"I don't necessarily think the Australian dollar will fall too much further because I think risk assets will pick up again," Mr Roberts.

"The relative strength of emerging markets and China spells a pretty strong phase over a period of months for the Australian dollar.

"The setbacks are always going to be there from time to time, but my suspicion is yes it can trip back a little bit perhaps, but it will find some buying."

He said the market would be watching out for the Australian Bureau of Statistics Wage Price Index for the September quarter, due out tomorrow.

Meanwhile the bond market was fairly flat at noon.

At midday on the ASX 24, the December 10-year bond futures contract was at 94.540 (implying a yield of 5.460 per cent), down from 94.570 (implying a yield of 5.430 per cent) yesterday.

The December three-year bond futures contract was steady with its previous close of 94.850 (5.150 per cent).