THE dollar opened slightly lower after following the euro down and later bouncing on a firmer US equities performance overnight.
At 7am (AEST)today, thedollar was trading at $US0.8444/49, down 0.5 per cent from yesterday's close of $US0.8490/92.
Since 5pm (AEST) yesterday, the local unit traded between $US0.8365 and $US0.8522.
"Overall, the first two thirds of the overnight session, the Aussie followed the euro down and the last third it followed equities up," Westpac New Zealand senior market strategist Imre Speizer said from Wellington.
The euro traded near the four-year low of $1.2112 that it reached last week. The euro dropped to $1.2182 in late New York trading from $1.2238 late on Wednesday.
It came after a report which showed Eurozone banks have parked a record amount of cash in the European Central Bank's (ECB) overnight deposit facility, underscoring spreading interbank tensions.
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Mr Speizer said this along with a series of "negative snippets", including reports the ECB would cease intervening in the Euro, and weak US retail figures, had led to the downward momentum.
"Risk assets around the world were slightly better off, but risk currencies were the odd class out and they sold off, led by the euro, from the early European part of the session," Mr Speizer said.
"So the euro sold off and everything else just followed that."
US stocks posted minor gains yesterday as investors examined mixed signals on the US economic recovery ahead of a highly awaited May jobs report.
After opening with modest gains, the major indices slid lower but clawed their way back to close in positive territory.
Mr Speizer said the rebound in US equities had helped lift the local currency.
"I'm guessing it's probably going to stay around (its current level). It's not going to drop out of bed," he said.
"You would guess that it's going to be supportive for the Aussie, at least in the early part of the session."
Expectations of a strong US payrolls number, to be released in the upcoming overnight session, also would support the currency.
Mr Speizer forecast the dollar would trade between US$0.8360 and US$0.8500 today.
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