THE dollar was higher at noon as a rise in the prices for commodities gave a boost to the local currency.
At midday (AEST) today, the dollar was trading at $US0.8755/59, up 1.42 per cent from Friday's close of $US0.8632/35.
Since 7am, the local currency traded between $US0.8721 and $US0.8776.
Nomura Australia chief economist Stephen Roberts said the dollar was underpinned by strong demand for commodities during Friday's offshore session.
The dollar is considered a commodity-driven currency due to mineral resources being the nation's largest exports.
Commodities were generally higher during Friday's offshore session.
New York's main oil contract, light sweet crude for August delivery, closed $US2.35 higher, or 3.07 per cent, at $US78.86 a barrel.
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Precious and base metals generally were also higher on the New York Mercantile Exchange.
August gold rose $US10.30 to settle at $US1256.20 per fine ounce.
July silver rose 37.4c to settle at $US19.11 per fine ounce, and July copper rose 9c to settle at $US3.0955 per pound.
"Commodity prices were a bit firmer over the weekend," Mr Roberts said.
"The Aussie dollar has been firmer against the US dollar and the US dollar has been down against the euro and the Japanese yen.
"There is an indication, at least in foreign exchange markets, that risk appetite has improved a little."
For the rest of the local session today, Mr Roberts forecast the dollar to trade between $US0.8720 and $US0.8780.
"It looks like it will be a rangebound session until we get a bit more information from overseas," he said.
The bond market was firmer at noon.
At midday today, the yield on the Commonwealth Government April 2020 bond was 5.236 per cent, down from Friday's close of 5.248 per cent, while the May 2013 bond was at 4.595 per cent, down from 4.621 per cent.
On the Sydney Futures Exchange, the September 10-year bond futures contract was at 94.745, up from Friday's close of 94.730, while the September three-year bond futures contract was 95.260, up from 95.240.
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