Dollar treads water after Friday's rally

THE Australian dollar has traded in a narrow range after climbing close to one cent over the weekend.

THE Australian dollar has traded in a narrow range after climbing close to one cent over the weekend.

At 12.00 (AEDT) today, the Australian dollar was trading at 104.65 US cents, up from 103.87 cents on Friday afternoon.

RBC Capital currency strategist Michael Turner said that with no significant economic data releases on Monday, the local unit drifted.

Since 07.00 (AEDT) the currency has traded between 104.63 US cents and 104.90 US cents.

"We opened where we closed and have sort of drifted up a little higher this morning, but it really hasn't done much," he said.

The Australian dollar rallied during the New York session on Friday as the Dow Jones and the S&P 500 both rebounded from earlier losses to end the day modestly higher.

The currency's rise also came as weak US housing data slashed demand for the greenback.

Data released by the US Commerce Department showed that new-home sales dropped 1.6 per cent in February, and have fallen nearly seven per cent since December.

Markets took the data as a sign that while the US economy was in recovery mode, the country's housing sector remained in trouble.

Mr Turner said, with little in the way of domestic economic news expected this week, the currency was likely to be driven by events offshore.

"We don't have much locally so we will be looking offshore for leads," he said.

At 12.00 (AEDT) on Monday, the June 10-year bond futures contract was trading at 95.785 (implying a yield of 4.215 per cent), up from 95.760 (4.240 per cent) on Friday.

The June three-year bond futures contract was at 96.340 (3.660 per cent), up from 96.320 (3.680 per cent).