THE dollar was higher at noon as an easing in concerns about the European debt crisis lifted investor appetite to high-risk assets such as equities and commodity-driven currencies.
At midday (AEST) today, the dollar was trading at $US0.8521/24, up 1.99 per cent from yesterday's close of $US0.8356/58.
From 7am (AEST) today, the local unit traded between $US0.8463 and $US0.8535.
Investor appetite to risk rose after China denied it was offloading its investment in Eurozone bonds.
China, the world's largest holder of foreign-exchange reserves, called the report in the Financial Times that it was considering reducing its holdings of eurozone debt as "baseless."
US equities rose, with the Dow Jones industrial average closing up 2.85 per cent on yesterday.
Equity markets in Asia followed the positive lead from Wall Street.
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Australia's benchmark S&P/ASX200 index up 1.81 per cent by 12.09pm (AEST), while Japan's Nikkei-225 index was 1.68 per cent higher.
Commonwealth Bank vice-president of institutional banking and markets Tim Kelleher said the rebound in investor appetite for risk followed China's confirmation of continued investment in Europe, which moderated worries about the debt crisis in the region.
"That was all on the clarification from the Chinese that they were not getting out of their euro bonds," Mr Kelleher said from Auckland.
"The market was probably a bit oversold.
"What has happened are the Aussie and the Kiwi have outperformed."
Mr Kelleher said the liquidity in Australian and New Zealand dollar trades was currently "particularly poor".
"The gains have been exacerbated by thin trading volumes," he said.
For the rest of the local session, Mr Kelleher forecast the dollar to trade between $US0.8300 and $US0.8350 today.
Meanwhile, the bond market was weaker at noon.
At noon (AEST), the yield on the Commonwealth Government April 2020 bond was 5.435 per cent, up from yesterday's close of 5.389 per cent, while the May 2013 bond was at 4.801 per cent, up from 4.759 per cent.
On the Sydney Futures Exchange, the June 10-year bond futures contract was at 94.565, down from 94.620 yesterday, while the June three-year bond futures contract was 95.130, down from 95.220.
Bills ignore ratings agenciesDollar lower at noon, bonds firmer
