THE dollar was higher at noon following a strong offshore session, but investors pared gains in Asian trade.
At midday (AEST) today, the dollar was trading at $US0.8240/42, up 0.34 per cent from yesterday's close of $US0.8212/14.
From 7am (AEST) today, the local unit traded between $US0.8211 and $US0.8278.
Nomura chief economist Stephen Roberts said the dollar had retreated in morning trade after recovering some recent losses during yesterday's trade overnight in New York.
Australia's benchmark S&P/ASX 200 index was down 0.13 per cent by 12.17pm (AEST), while Japan's Nikkei-225 index was 0.86 per cent lower.
"Asian equity markets are back a bit from their opens," Mr Roberts said.
"There has been a bit of softness, a bit of to-ing and fro-ing."
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The late rally on Wall Street had given the currency a firm start to the local session, Mr Roberts said.
Equity markets in the US rebounded overnight, with The Dow Jones industrial average closing up 1.26 per centon yesterday,while the broader-based Standard & Poor's 500 index ended 1.10 per cent higher.
"That gave a reasonable lift in the Australian dollar, but it is just giving up a little bit of those gains," he said.
Mr Roberts said a seventh monthly fall in new homes loans in April also weighed on the dollar.
Finance commitments for owner-occupied housing fell 1.8 per cent in April, seasonally adjusted, to 47,669, the Australian Bureau of Statistics said today.
It was the fewest new loans for owner-occupiers since March 2001.
Meanwhile, the bond market was mixed at noon.
At midday (AEST) today, the yield on the Commonwealth Government April 2020 bond was 5.323 per cent, down from yesterday's close of 5.343 per cent, while the May 2013 bond was at 4.678 per cent, up from 4.670 per cent.
On the Sydney Futures Exchange, the June 10-year bond futures contract was at 94.680, up from yesterday's close of 94.670, while the June three-year bond futures contract was 95.260, down from 95.270.
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