Economic data gives dollar a boost

THE dollar recovered from earlier losses to be slightly lower, with better than expected economic data giving the currency a boost.

THE dollar recovered from earlier losses to be slightly lower at noon today, with better than expected economic data giving the local currency a boost.

At midday (AEDT), the dollar was trading at US96.43c, up from yesterday's close of US96.52c. The currency earlier reached as low as US96.05c.

Royal Bank of Scotland foreign exchange strategist Greg Gibbs said traders were heartened by better than expected building approvals and balance of payment figures.

"Building approvals were quite strong and net exports were not as weak as feared, so the combination of those two things probably gave the Aussie a bit of a boost today," Mr Gibbs said.

Mr Gibbs expected the local currency to trade at its lower range for the rest of the day due to European debt worries.

"But it has come a long way from its peaks recently so it's also got some natural support around these levels as well," he said.

Since 7am, the local unit traded in a range between US96.05c and US96.60c.

The dollar had opened lower as risk averse investors dumped the currency over lingering fears of debt contagion spreading through Europe.

US stocks fell sharply in intraday trade on Wall Street overnight, reflecting concerns over the eurozone economy, but they recovered most of their losses as trading entered the late afternoon.

The euro fell to a two-month low and investors flocked to the safety of the dollar and Treasuries after the European Union agreed Sunday to provide nearly $US90 billion ($93.53 billion) in rescue loans for Ireland.

The move is designed to shore up Ireland's cash-strapped banks, but it does little to relieve investors' concerns about other European countries, including Portugal and Spain.

Meanwhile, the bonds market was firmer at noon.

At midday on the ASX 24, the December 10-year bond futures contract was at 94.540 (implying a yield of 5.460 per cent), up from yesterday's close of 94.490 (5.510 per cent).

The December three-year bond futures contract was at 94.940 (5.060 per cent), up from 94.900 (5.100 per cent).