Dollar under pressure from Greenback

THE dollar was under pressure after losing almost US1c in morning trade, as the US dollar strengthened.

THE dollar was under pressure at midday (AEDT) after losing almost US1c in morning trade, as the US dollar strengthened and equities lost ground.

At midday today, the local unit was trading at US98.89c, down from US99.42c yesterday.

Since 7.30am, the dollar has traded between US98.88c and US99.56c.

Commonwealth Bank chief currency strategist Richard Grace said it was unclear exactly what had driven the dollar down in late morning trade.

"It does look like there's some US dollar strength going on, but it does look like a weaker Aussie story because it's weaker on all the crosses," Mr Grace said.

The sharemarket was lower at noon as investors sold stocks amid uncertainty about the impact of Queensland's flood crisis on the economy.

Australia's trade surplus narrowed in November in what economists say is a further sign of a softening Australian economy.

The balance of goods and services was a surplus of $1.925 billion in November, seasonally adjusted, from a downwardly revised surplus of $2.561 billion in October, official figures show.

It was difficult to predict the fortunes of the local currency in afternoon trade, Mr Grace said.

"It's under some downward pressure at the moment.

"We are seeing some weakness in the equity markets in Asia, maybe that's got something to do with it.
"It's hard to be sure, but if that continues, we might see the Aussie under some pressure."

Meanwhile, at noon on the ASX 24, the March 10-year bond futures contract price was 94.485 (implying a yield of 5.515 per cent), up from yesterday's close of 94.445 (5.555 per cent).

The March three-year bond futures contract price was 94.930 (5.070 per cent), slightly up from 94.840 (5.160 per cent).