Dollar trading flat after overnight fall

THE Australian dollar is trading in a narrow range after tumbling close to two US cents overnight.

Australian dollar

THE Australian dollar is trading in a narrow range after tumbling close to two US cents overnight.

The currency fell to 100.47 US cents early today, its lowest level since June 2012, following a surge in the value of US dollar. It recovered slightly during the morning session but traded in a narrow range.

At 12pm AEST it was at 100.89 US cents, still well down from 102.43 US cents yesterday afternoon.

"The Australian dollar has stemmed the bleeding today after some pretty steep falls overnight," CMC Markets foreign exchange dealer Tim Waterer said.

He said investors spent big on the US dollar overnight after better jobless claims data, which raised expectations the US Federal Reserve would wind back some of its stimulus measures.

Meanwhile, the US dollar pushed above the key 100-yen level for the first time in nearly five years. That further boosted the greenback's popularity with investors and lifted its value against other currencies.

Mr Waterer said that if the Australian dollar hadn't received a boost following stronger local employment figures yesterday it may have moved below the 100-US cent mark today.

But, he said, a move below parity may still be on the cards.

"If we see a combination of solid US strength and weakness in commodity prices, certainly, the parity level could be called into question over the next few sessions," 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 96.785 (implying a yield of 3.115 per cent), down from 96.845 (3.165 per cent) yesterday. The June three-year bond futures contract was at 97.380 (2.620 per cent), down from 97.440 (2.560 per cent).