Dollar nudges higher ahead of US data

THE Australian dollar nudged higher at noon as traders eyed key data from Europe and the US, due overnight.

THE Australian dollar nudged higher at noon as traders eyed key data from Europe and the US, due overnight.

At 1200 AEST on Friday, the Australian dollar was trading at 107.39 US cents, up slightly from 107.31 US cents on Thursday.

Since 0700 AEST on Friday, the local unit traded between 107.10 US cents and 107.60 US cents.

ANZ senior FX strategist Grant Turley said the local currency had traded in a tight range as investors awaited offshore data.

In the debt-crippled Eurozone, the result of Europe-wide stress tests on 90 banks are due overnight, which could force some lenders to seek state aid.

Major US data due after FRiday's local close include Federal Reserve industrial output and the Empire State Manufacturing Survey for July by the New York Federal Reserve.

"The price action has been relatively subdued,'' Mr Turley said.

"There was a little bit of a flurry around the (Standard and Poors) downgrade warning, which appeared to translate into a modest US dollar selling move, but basically there hasn't been any fallout.

"We've had quite a choppy weak and I think a lot of people have retreated to the sidelines, especially going into a northern hemisphere summer, and no local data to trade off.''

He expects a quiet afternoon session ahead of offshore data.

"We've already seen overnight reports that some Spanish banks have failed and I think a number of other euro ones could have failed,'' he said.

''(In the US) people will focus on the Empire Manufacturing Survey ... what people will be looking for is a bit of a bounce back in that.''

Meanwhile, the Australian bond market was weaker at noon.

At 1200 AEST, the September 10-year bond futures contract was at 95.035 (implying a yield of 4.965), down from Thursday's close of 95.070 (4.930 per cent).

The September three-year bond futures contract was at 95.530 (4.470 per cent), down from 95.550 (4.450 per cent).