THE dollar was weaker at noon, after US Federal Reserve chairman Ben Bernanke spelled out an uncertain future for the US economic recovery.
At midday (AEST), the dollar was trading at $US0.8755/58, down from yesterday's close of $US0.8828/31.
Since 7am, the dollar traded between $US0.8748 and $US0.8783.
Commonwealth bank currency strategist Joe Capurso said commodity prices and the local unit slipped during the offshore session after Mr Bernanke warned the US Senate the outlook for economy remained "uncertain".
Mr Bernanke also said the central bank could step in to bolster recovery.
"He was perceived as having a dovish view," Mr Capurso said.
"There was a big US dollar rise and commodities and the Aussie sold off."
The Thomson-Reuters/CRBIF index of 19 commodity prices ended New York's overnight session flat at 261.53 points, while risk sensitive US shares tumbled.
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Mr Bernanke warned the economy would see only "moderate growth, a gradual decline in the unemployment rate, and subdued inflation over the next several years".
His comments kicked off two days of hearings in Congress, which is deeply divided over how to deal with high unemployment and a stuttering recovery.
Mr Capurso said the market's depressed reaction to Mr Bernanke's comments was overdone.
"I have to say, the market overreacted," he said.
"Uncertainty. We market analysts say that all the time as a disclaimer. Policymakers say that all the time."
Mr Capurso said he expected the local unit to trade in a tight range during the rest of the domestic session.
He said he doubted it would get as high as $US0.8800 or as low as $US0.8700.
Meanwhile, the debt market was firmer at noon.
At midday today, the yield on the Commonwealth Government April 2020 bond was 5.135 per cent, down from yesterday's close of 5.169 per cent, while the May 2013 bond was at 4.603 per cent, down from 4.630 per cent.
On the Sydney Futures Exchange, the September 10-year bond futures contract was at 94.860, up from yesterday's close of 94.815, while the September three-year bond futures contract was 95.320, up from the previous close of 95.290.
Dollar deflates as bonds follow suitBernanke predicts job market will be slow to recover
