Dollar lower on Europe uncertainty

THE dollar was lower today as uncertainty about the European debt crisis continues.

THE dollar was lower today as uncertainty about the European debt crisis continues.

At midday A(EDT), the dollar was trading at US98.70c, down from yesterday's close of US99.15c.

Since 7am, the local unit traded in a range between US98.27c and US98.95c.

CommSec economist Savanth Sebastian said the whole Irish debt issue had reverberated around markets.

"There's been a bit of modest weakness in most of the currencies against the US dollar," Mr Sebastian said.

Markets were reacting to the uncertainty in Europe in the absence of any local data while the United States took a Thanks Giving holiday, he said.

But he said Ireland was "pretty much sorted" in terms of its debt issues.

"The banks are well capitalised until mid 2011 and its latest tranche of support from the EU and IMF will ensure that it will remain well capitalised."

Ireland's banks will be pruned down, merged or sold as part of a massive EU-IMF bailout taking shape, the Irish Government said.

Some experts say the rescue may have come too late to save the next weak link, Portugal, from a similar fate.

Ireland's crisis also appears likely to force the early departure of its government, calling into doubt the credibility of Prime Minister Brian Cowen's four-year austerity plans.

Mr Sebastian said traders were waiting to see "what's next".

"If anything their focus is turning to Portugal and Spain."

However, he said the European debt crisis would not derail the global economy.

He predicts the local unit will trade around current levels during the afternoon.

Meanwhile, the bonds market was firmer at noon.

At noon on the ASX 24, the December 10-year bond futures contract was at 94.510 (implying a yield of 5.490 per cent), up from yesterday's close of 94.470 (5.530 per cent).

The December three-year bond futures contract was at 94.810 (5.190 per cent), up from its previous close of 94.780 (5.220 per cent) where it closed previously.