USD strength pulls Aussie dollar lower

THE dollar was trading lower this morning, as traders await a key speech from President Barack Obama on the economy and on US dollar strength.

THE dollar was trading lower this morning, as traders await a key speech from President Barack Obama on the economy and on US dollar strength.

At 7:00 (AEST), the local unit was trading at 105.76 US cents, down from 105.96 cents yesterday afternoon.

Since 17:00 (AEST) yesterday, the local unit has traded between 105.66 US cents and 106.59 according to IRESS data.

GFT Forex director of currency research Kathy Lien said the US dollar had a solid overnight session, trading higher against all the major currencies.

"The sell-off in US stocks suggests that the rally in the greenback is purely a function of risk aversion," Ms Lien said.

During the offshore session, US Federal Reserve chief Ben Bernanke said the central bank was ready to take new action to speed up the economy.

"The Federal Reserve has a range of tools that could be used to provide additional monetary stimulus," Mr Bernanke said in a speech in Minneapolis on Thursday (US time).

Ms Lien said the US dollar retained its safe-haven appeal, despite the prospect of more fiscal and monetary stimulus.

Traders were now awaiting a key speech from President Obama, in which he's expected to announce a stimulus plan aimed at promoting job growth.

"With no major US economic reports scheduled for release tomorrow, investors will most likely spend the day digesting and analysing President Obama's speech."

President Obama is due to deliver his speech at 9:00 Friday (AEST).

No major Australian economic data is due today.