Dollar higher on QE3 uncertainty

THE dollar is higher, on falling expectations that the US central bank will act to stimulate the world's biggest economy.

THE dollar is higher, on falling expectations that the US central bank will act to stimulate the world's biggest economy.

At 12pm AEST today, the local unit was trading at 104.95 US cents, up from 104.73 cents yesterday.

IG Markets institutional trader Chris Weston said despite the quiet trade, investors appeared more sceptical about the likelihood of quantitative easing (QE3) in the US, and this had influenced the market's tone.

"I think the US dollar is driving a lot of these risk currencies," he said.

"There appears to have been a re-pricing of QE3 expectations over the last week or so - there are a lot of brokers saying we're not likely to get anything in September."

Mr Weston said the market now expected the US Federal Open Market Committee (FOMC) to hold off on QE3 until at least next year, based on a number of strong data readings.

Meanwhile, Australian bond futures prices were lower.

At noon AEST today, the September 10-year bond futures contract was trading at 96.610 (implying a yield of 3.390 per cent), down from 96.725 (3.275 per cent) at yesterday's close.

The September three-year bond futures contract was at 97.140 (2.860 per cent), down from 97.210 (2.790 per cent).