Dollar hits one-month high on Fed move

THE dollar has rallied to a fresh one-month high amid optimism about a new stimulus package in the US.

Australian dollar

THE dollar has rallied to a fresh one-month high amid optimism about a new stimulus package in the US.

At 12pm AEST today, the currency was trading at 105.76 US cents, up from 104.52 US cents yesterday. It rose as high as 105.80 US cents during the morning session, its highest level in more than a month.

The currency rallied more than one US cent early this morning after the US Federal Reserve announced an open-ended scheme to buy $40 billion ($38.39 billion) worth of mortgage-backed securities a month. It said the program would continue until the country's economy improved and its flagging jobs market strengthened.

National Australia Bank currency strategist Emma Lawson said the news pushed the US dollar lower.

"It meant the US dollar is weaker across the board and the Aussie dollar is responding accordingly," she said.

Ms Lawson said the dollar was likely to remain strong for at least the rest of the day.

"There isn't any other news, relatively speaking, on an economic basis today so the Aussie dollar is likely to remain well-supported through the Asian session," she said.

Meanwhile, Australian bond futures prices were lower at noon. At 12pm AEST on Friday, the September 10-year bond futures contract was trading at 96.825 (implying a yield of 3.175 per cent), down from 96.865 (3.135 per cent) yesterday. The September three-year bond futures contract was at 97.315 (2.685 per cent), down from 97.385 (2.615 per cent).