Dollar rises after Obama speech

THE Australian dollar has lifted after US President Barack Obama flagged a proposal to create jobs.

THE Australian dollar has lifted after US President Barack Obama flagged a proposal to create jobs.

At noon, the local unit was trading at 106.36 US cents, up from 105.96 cents on Thursday afternoon.

Since 7:00 (AEST), the local unit has traded between 105.69 US cents and 106.29.

President Obama told Congress on Thursday (US time) that he will announce on September 19 a new over-arching plan laying out how he intends to reduce America's ballooning budget deficit.

"A week from Monday, I'll be releasing a more ambitious deficit plan - a plan that will not only cover the cost of this jobs bill, but stabilise our debt in the long run," Mr Obama said, unveiling a $US447 billion ($423 billion) jobs initiative.

Commonwealth Bank currency strategist Joseph Capurso said the president's remarks gave the Australian dollar a lift.

"Obama's speech suggests that he wants to stimulate the US economy more, so that was good for risk appetite and that's helped push the Aussie dollar higher," he said.

Shortly after Mr Obama's speech, China reported its consumer price index (CPI), a key measure of inflation, had risen 6.2 per cent in August from a year earlier, down from July when it hit a more than three-year high of 6.5 per cent.

"Inflation pressures are still there in China, which is usually not a good thing for the Aussie dollar, although the news hasn't really pushed it down too much," Mr Capurso said.

Traders were still waiting on China's industrial production and retail sales figures for August, due later in the day.

With no major economic data due in the remainder of the local session, Mr Capurso said the Australian dollar is likely to trade between 105.50 US cents and 107 US cents.

Meanwhile, the Australian bond market was weaker.

At noon, the September 10-year bond futures contract was trading at 95.720 (implying a yield of 4.280 per cent), down from Thursday's 95.740 (4.260 per cent).

The September three-year bond futures contract was at 96.245 (3.755 per cent), down from 96.290 (3.710 per cent).

On Tuesday, the 10-year contract traded as high as 95.840 (4.160 per cent), which was the highest point for the latest contract since March 23, 2009.