Dollar loses value on Japan earthquake news

THE dollar was almost US1c lower at noon, on the back of lower commodities prices and news of further earthquakes in Japan.

THE dollar was almost US1c lower at noon, on the back of lower commodities prices and news of further earthquakes in Japan.

At noon (AEST) today, the local unit was trading at US104.66c, down from yesterday's local close of US105.6c.

Since 7am, the dollar has traded between a low of US104.54c and a high of US105.12c.

The domestic unit had reached a fresh post-float high of US105.84c on Saturday.

Overnight (AEST), oil prices dropped as news emerged that Libyan leader Muammar Gaddafi accepted a proposed "roadmap" calling for an immediate ceasefire. The plan was later rejected by insurgents, saying Gaddafi must go immediately.

Nomura head of foreign exchange Kurt Magnus said the Australian dollar had lost value following news of new earthquakes in Japan and falling commodities prices.

"These are little pull-backs to me and they're intra-day and so the Aussie has just gone with it," Mr Magnus said.

Today, the National Australia Bank Business Survey for March showed business conditions rose 11 points to plus nine index points, moving above the zero level that separates expansion from contraction.

There was no other major local data due today.

In the medium to long term, the dollar looked to be well supported, Mr Magnus said.

"I am a higher-for-longer argument person.

"My concerns are much more medium-to-long term, and they are global inflation, commodity inflation and food inflation.

"Those factors drive Australian exports and that's been my underlying theme."

Mr Magnus expected the domestic unit to trade between US104.4c and US105.2c through the rest of the local session.

Meanwhile, the local bond market was firmer at noon.

At midday, the June 10-year bond futures contract was trading at 94.345 (implying a yield of 5.655 per cent), up from 94.315 (5.685 per cent) yesterday.

The June three-year bond futures contract was at 94.780 (5.220 per cent), higher from its previous close of 94.760 (5.240 per cent).