Dollar trading higher

THE dollar is more than a quarter of a US cent higher after the ECB cut its key interest rate and gains on equity markets.

THE Australian dollar is more than a quarter of a US cent higher after the European Central Bank cut its key interest rate and gains on equity markets.

At 12pm AEST today, the currency was trading at 102.64 US cents, up from 102.36 US cents yesterday afternoon.

The Australian dollar strengthened early today in the wake of the ECB's decision to cut its refinancing rate to a record low of 0.5 per cent and stronger US unemployment and trade data, which helped boost equity markets.

ForexCT head of research Steven Dooley said the Australian dollar had gained ground partly as a result of hitting a key support level around 102.20 US cents.

But, he said, the Australian dollar continued to be weighed down by expectations the Reserve Bank of Australia (RBA) could cut the cash rate again, possibly at its next meeting on May 7.

He said the currency could fall below the 102.20 US cent level tonight, depending on the release of key US monthly non-farm employment data.

"If we get a soft jobs number, which I think we will, I think there is a chance we could move below those levels and even head back towards 101.50 (US cents)," he said.

Meanwhile, Australian bond futures prices were lower at noon. At 12pm AEST today, the June 10-year bond futures contract was trading at 96.955 (implying a yield of 3.045 per cent), down from 96.970 (3.030 per cent) yesterday. The June three-year bond futures contract was at 97.480 (2.520 per cent), down from 97.490 (2.510 per cent).