Dollar holds its ground above parity

THE dollar has managed to stay above parity with the US dollar despite downwards pressure from positive US economic data.

THE dollar has managed to stay above parity with the US dollar as downwards pressure from positive American economic data was cancelled out by strong commodity prices.

At 1pm (AEDT), the local unit was trading at US100.33c, a tad up from yesterday's close of US100.29c.

Since 7am, the local unit has traded between US100.22c and US100.42c.

In overnight trade the local currency reached US100.63c, its highest level since November 11 when it hit US100.86c.

Overnight data from the US showed weekly jobless claims at their lowest level in a year and November consumer spending posted its fifth consecutive month of gains.

Nomura Australia chief economist Stephen Roberts said the Australian dollar was holding its ground above parity.

"We've really been comfortably above parity right through last night and into our morning trade today.

"US jobless claims were good," Mr Roberts said.

"One of the bigger numbers we'll get will be once the market gets going again is non-farm payrolls, so looking out to that it looks like it will be a reasonably good number."

Mr Roberts said the dollar continued to stay strong against the euro and the pound largely due to concerns over European sovereign debt.

"The Australian dollar was really strong on the crosses, at times it's been above 65 pence and into and into the mid 76 cents against the euro," he said.

The Australian bond market closed flat to slightly weaker on Christmas Eve.

At 12.30pm (AEDT) on the ASX 24, the March 10-year bond futures contract was at 94.295 (implying a yield of 5.705 per cent), slightly down from yesterday's close of 94.300 (5.700 per cent).

The March three-year bond futures contract was at 94.600 (5.400 per cent), level with its previous close.

UBS interest rate strategist Matthew Johnson said the global bond markets had some weakness ahead of the next week's US bond auction.

"It was a weak start to the overnight session, with three-year future trading down to 94.650 straight away.

"I think that global markets are under a bit of pressure, the spectre of supply is weighing on the market."

In the Christmas-New Year period there will be a series of US government bond auctions by the US Federal Reserve, worth $US100 billion.

"That weighed on US Treasuries, which in turn weighed on our market," Mr Johnson said.

Mr Johnson said the US jobless claims data overnight was actually a little bit weaker than expected.

"So you would have expected bond prices to rise and interest rates to fall but that isn't what happened.

"My argument is that's because of the supply next week," he said.