Dollar higher at noon

THE Australian dollar was firmer at noon, having traded close to 104.8 US cents during a quiet morning session.

THE Australian dollar was firmer at noon, having traded close to 104.8 US cents during a quiet morning session.

At 12pm AEDT today, the Australian dollar was at 104.75 US cents, up from yesterday's local close of 104.65 US cents.

The currency traded in a narrow range during the morning, moving between a low of 104.72 US cents and a high of 104.87 US cents.

Despite the lack of movement so far today, the Australian dollar has risen about 1.8 per cent against the US dollar, 2.1 per cent against the Japanese yen and 4.5 per cent against the euro in the past month.

OzForex chief currency strategist Jim Vrondas said the Australian dollar was now near the upper end of the recent trading band between 101 and 106 US cents.

"We are nearing the top of that range so it is only natural that we get a bit of a pause at these levels," Mr Vrondas said. "The question the market is probably asking itself now 'is there enough behind this move at the moment to push the currency outside that range'?"

The Australian dollar reached a high of 104.97 US cents during the overnight offshore session, when the currency moved in line with gains on US and European equity markets.

There was little reaction to the Reserve Bank of Australia's financial stability review, which said global financial conditions had improved, given encouraging signs from the US economy and rallies on share markets at the start of 2013.

The twice-yearly RBA report, released on Wednesday, said the Australian banking system was in a strong position, and better global conditions since the middle of 2012 had lowered wholesale funding costs for the larger local banks.

Meanwhile, the Australian bond market was firmer at noon.

At 12pm AEDT today, the June 10-year bond futures contract was at 96.450 (implying a yield of 3.550 per cent), up from yesterday's local close of 96.405 (3.595 per cent).

The June three-year bond futures contract was at 97.010 (2.990 per cent), up from 96.950 (3.050 per cent) previously.