THE dollar was firmer at noon, touching $US0.88 during the morning as disappointing US housing data stalled the US dollar's recent rally.
At 12pm AEDT, the Australian dollar was trading at $US0.8797/02, up from yesterday's close of $US0.8759/61.
During the morning, the local unit traded between a low of $US0.8786 and $US0.8810.
The dollar snapped a six-session losing run during offshore trading, as the US dollar weakened in response to a disappointing US new home sales report.
"That has given the market reason to start to question when the US may in fact start their rate hike cycle," CMC Markets FX dealer Tim Waterer said.
"That's what saw a bit of a sell-off in the US dollar, and the Aussie dollar make up some ground which it had lost in past fortnight."
US new home sales fell to a seven-month low of 355,000 in November, down 11.3 per cent from the previous month and well below market expectations of 440,000.
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Before the overnight rally, the Australian dollar had lost about 7.1 per cent against the US dollar since it reached $US0.9406 on November 16.
"The disappointing numbers out of the US did give the Australian currency some respite, because it was looking at perhaps falling below $US0.8700 there at one point, and really ending the year on a sour note," Mr Waterer said.
Mr Waterer said the dollar continued to find support during the morning, as the price of gold rose in early Asian trading.
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