Dollar lower on RBA testimony

DOLLAR trades slightly lower after comments from the central bank governor indicate there won't be a rate rise in December.

THE dollar was trading slightly lower after comments from the central bank governor indicated there won't be a rate rise in December.

At midday (AEDT) today, the dollar was trading at US97.68c, down from yesterday's close of US97.82c.

Since 7am, the local unit traded in a range between US97.53c and US98.17c.

The dollar got a boost overnight after German Chancellor Angela Merkel and French President Nicholas Sarkozy urged quick action on an agreement providing Ireland with a financial bailout from the EU and IMF.

This morning, Reserve Bank of Australia (RBA) governor Glenn Stevens appeared before the House of Representatives Standing Committee on Economics at Parliament House.

He was joined by assistant governors Guy Debelle and Philip Lowe.

Nomura Australia chief economist Stephen Roberts said the dollar pulled back during the morning following comments from the RBA testimony.

"They made it reasonably clear that they're happy with the rates structure for the time being," he said.

"Having said they are pretty adamant that over time inflation will go up, they are still expecting strong growth and the risk is still on the side of higher interest rates over the course of the year.

"So I suspect it's a very slight pullback in the Australian dollar on the basis the Reserve Bank won't be lifting rates in December, but I don't think the pullback in the Australian dollar will go particularly far."

A raft of economic data will be released next week, with the highlight being national accounts on Wednesday, which includes gross domestic product (GDP)

Mr Roberts said next week could be volatile for the dollar, but he expected the dollar to broadly stay firm.

"That's on the basis of another comment that Glenn Stevens made this morning that the centre of global economic growth has shifted towards Asia," he said.

Meanwhile, the bonds market was firmer at noon.

At midday on the ASX 24, the December 10-year bond futures contract was at 94.475 (implying a yield of 5.525 per cent), up from yesterday's close of 94.455 (5.545 per cent).

The December three-year bond futures contract was at 94.850 (5.150 per cent), up from 94.790 (5.210 per cent).