Dollar higher at noon, bonds steady

The economy is getting better but the central bank's interest rate cutting cycle is coming to an end.

THE Australian dollar is inching towards 104.5 US cents as market players sell the US dollar in response to some disappointing US economic data.

However, moves were limited today ahead of the Reserve Bank of Australia's interest rate decision at 2.30pm AEDT.

At 12pm AEDT, the Australian dollar was at 104.43 US cents, up from Thursday's local close of 104.22 US cents.

The weakening of the US dollar, which began during the overnight offshore session after a weaker-than-expected US manufacturing report, continued when Australian markets reopened after the Easter long weekend.

The Australian dollar began a shortened post-Easter week at 104.22 US cents and ground its way up to an intraday high of 104.45 just before noon AEDT.

"That theme of US dollar weakness has continued this morning during Asian trading hours," CMC Markets senior trader Tim Waterer said. "But it is quite a tentative move at this stage, particularly with an RBA announcement waiting on the doorstep this afternoon."

"I think any moves of greater significance will be reserved until after we see what the statement from the RBA contains."

While the central bank was widely tipped to keep the cash rate unchanged at three per cent, interest will be on governor Glenn Stevens' accompanying statement for clues about the RBA's thinking on the future direction of rates.

Mr Waterer said the Australian dollar would react positively - perhaps rallying up to 104.7 US cents - should the RBA statement suggest rates were likely to stay on hold for the foreseeable future.

Meanwhile, the Australian bond market was flat at noon. At 12pm AEDT, the June 10-year bond futures contract was trading at 96.585 (implying a yield of 3.415 per cent), broadly unchanged from Thursday's local close of 96.570 (3.430 per cent). The June three-year bond futures contract was at 97.120 (2.880 per cent), compared with 97.130 (2.870 per cent) previously.

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Aust dollar lower, bonds firmer

Economic and political uncertainty in Italy dragged down European markets while falls in banks and tech stocks hit Wall Street.

THE Australian dollar has opened lower, dipping below 104.5 US cents during the overnight session as worries about Europe prompted investors to turn to the US dollar.

A negative day on Wall Street also dampened appetite for the Australian dollar.

At 7am AEDT today, the local currency was trading at 104.47 US cents, down from yesterday's local close of 104.68 US cents.

Overnight, the local currency moved between a low of 104.19 US cents and a high of 104.78 US cents.

BNP Paribas currency strategist Vassili Serebriakov said the ongoing turmoil in Cyprus and Italy were the main concerns for markets.

"The headlines have been worrisome from Europe and that has been weighing on sentiment," Mr Serebriakov said from New York.

"It was more of a risk off kind of environment, with equities generally lower and the US dollar stronger."

The banks in Cyprus were due to open on Thursday, while Italy appears no closer to forming a government a month after elections were held.

Despite the move lower in offshore trading, the Australian dollar was the best-performing currency among the Group of 10 nations in March.

The local unit has risen about 2.2 per cent against the US dollar so far in March, and was up about two per cent against the Japanese yen and more than four per cent firmer against the euro.

Mr Serebriakov said there was "probably an element of profit taking" during the overnight session, given the Australian dollar's recent gains.

In economics news today, the TD Securities-Melbourne Institute inflation gauge for March is due for release.

Also, the Australian Bureau of Statistics will publish job vacancies figures for the three months to February and the Reserve Bank of Australia releases financial aggregates figures for February.

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Aust dollar lower, bonds firmer

Economic and political uncertainty in Italy dragged down European markets while falls in banks and tech stocks hit Wall Street.

THE Australian dollar was trading near 104.5 US cents at noon, after a quiet morning with little news to push the currency one way or the other.

At 1200 today, the local currency was trading at 104.52 US cents, down from Wednesday's local close of 104.68 US cents.

The Australian dollar opened the local session at 0700 AEDT at 104.47 US cents and was largely unchanged during the morning, moving between 104.54 US cents and 104.44 US cents.

"We remain in very tight ranges waiting for further news flow from Europe," Deutsche Bank foreign exchange strategist John Horner said.

The Australian dollar has been one of the better performing currencies in the past month, having climbed about 2.2 per cent against the US dollar and two per cent against the Japanese yen.

The local unit was also up more than four per cent against the euro, in response to the banking crisis in Cyprus and the ongoing stalemate in Italy, which is yet to form government a month after elections were held.

"The Italian political stalemate was brought back to centre stage last night, particularly given the weakness of the bond auction there," Mr Horner said.

Mr Horner said he expected further euro weakness in the weeks ahead.

The Australian Bureau of Statistics' job vacancies figures, which came out a bit weaker than expected, had no impact on the currency, Mr Horner said.

Meanwhile, the Australian bond market was stronger at noon.

At 1200 today, the June 10-year bond futures contract was trading at 96.565 (implying a yield of 3.435 per cent), up from yesterday's local close of 96.470 (3.530 per cent).

The June three-year bond futures contract was at 97.140 (2.860 per cent), up from 97.020 (2.980 per cent) previously.

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