Dollar higher as gold price rises

THE dollar was higher, due to a rise in the gold price in morning trade and improved optimism over the Japanese economy.

At midday (AEDT), the dollar was trading at US99.58c, up from Friday's local close of US99.31c.

Since 7am today, it traded between a low of US99.42c and a high of US99.82c.

On Friday, the Group of Seven (G7) nations issued a statement saying the United States, Britain, Canada and the European Central Bank would help to dampen the rising yen to support the Japanese economy, which has been hit hard by a massive earthquake.

CMC markets foreign exchange dealer Tim Waterer said the dollar continued to strengthen.

"It's still riding high from the G-7 news from Friday and that increased stability has helped a confidence currency like the Australian dollar," Mr Waterer said.

"In terms of what it has done this morning, it did creep higher early on. It went from US99.50c to US99.80c.

"That was on the back of a hike in the gold price this morning.

"That interest fed across to commodity currencies like the Australian dollar."

The spot price of gold rose to a high of $US1428.43 today after closing at $US1412.15 on Friday in Sydney.

Mr Waterer said the movement in the gold price was exacerbated by thin trading volumes caused by Japanese markets being closed due to a public holiday.

Mr Waterer said the market would focus on the release of February existing home sales data tonight (AEDT).

"That will have an impact on whether US stocks post a third night of gains or not.

"I think that if we did see a positive existing home sales figure tonight that would be good for high yielding assets from a confidence point of view.

Mr Waterer said he expected the dollar to trade in a range between US99.15c and US99.90c for the rest of the day.

Meanwhile, the local bond market was weaker at noon.

At midday on the ASX 24, the June 10-year bond futures contract price was 94.575 (implying a yield of 5.425 per cent), down from Friday's close of 94.585 (5.415 per cent).

The June three-year bond futures contract was trading at 95.010 (4.990 per cent), down from its previous close of 95.030 (4.970 per cent).