Dollar lower on flood fears

THE dollar was lower at noon (AEDT) today as investors shrug off strong US data and continue to fret about the extent of the floods.

THE dollar was lower at noon (AEDT) today as investors shrug off strong US data and continue to fret about the extent of the Queensland floods.

At noon, the local unit was trading at US98.90c, down from US99.67c on Friday.

Since 5pm on Friday, the Australian dollar traded between US99.17c and US98.84c.

ICAP senior economist Adam Carr said the market had been weighed down by persistent concerns about the extent of flooding along Australia's eastern seaboard.

"We have seen a bit of volatility recently and we took a bit of a hit this morning," he said.

"The general news flow out of the US in Friday was supportive of risk trade.

"I can only assume the floods are weighing on the Aussie."

A battery of US data over the weekend showed US industrial production rose in December by its largest amount in five months, while retail sales rose for a sixth consecutive month in December, the commerce department said.

Sales are 13.5 per cent above the recession low, hit in December 2008.

Meanwhile, consumer prices rose 0.5 per cent last month, the largest increase in 18 months and a reflection of rising gas prices, the US Labor Department said.

Outside of energy costs, there was little sign of widespread inflation, however.

Core inflation, which strips out volatile components, energy and food, was up 0.1 per cent in December.

Mr Carr said he expected the rest of today's session to be quiet, with no market moving data due.

Meanwhile, At midday on the ASX 24, the March 10-year bond futures contract price was 94.435 (implying a yield of 5.565 per cent), down from Friday's close of 94.470 (5.530 per cent).

The March three-year bond futures contract price was 94.840 (5.160 per cent), down from 94.870 (5.130 per cent).