Dollar lower despite dovish Bernanke comments

THE dollar lost gains made after the US Fed boss said the tapering of stimulus was not on a preset course.

Dollar lower despite dovish Bernanke comments

THE Australian dollar has lost gains made after the Federal Reserve chairman said the tapering of US economic stimulus was not on a preset course.

At 12pm AEST today, the local unit was buying 91.86 US cents, down from 92.08 cents yesterday.

In testimony to Congress, central bank boss Ben Bernanke said economic stimulus could be wound up next year if economic growth remained steady.

But, he said tapering of the Fed's $US85 billion-a-month bond purchase program was not a "preset course", which put downward pressure on the US dollar, driving the Aussie above 92 US cents.

Westpac chief currency strategist Robert Rennie said the Australian dollar was now experiencing a "hangover".

"The Aussie is probably a bit disappointing, given the sense that we got from Bernanke that while the Fed is predisposed to tapering, it's very much dependent on the outcome of employment, inflation and financial stress in the months ahead," he said.

"I'm slightly surprised the Aussie is not trading a bit better."

Mr Rennie said investors were waiting for next week's Australian second-quarter inflation figures.

Meanwhile, Australian bond futures were higher on Dr Bernanke's comments.

At 12pm AEST the September 10-year bond futures contract was trading at 96.335 (implying a yield of 3.665 per cent), up from 96.240 (3.760) yesterday.

The September three-year bond futures contract was at 97.310 (2.690 per cent), up from 97.250 (2.750 per cent).

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