1 AUD = 1 USD?

Dollar higher at noon in wait for US CPI | News.com.au

THE dollar was stronger at noon, as investors await US inflation data on Friday to see whether it prompts the US Federal Reserve to restart stimulus activity.

At midday (AEDT), the dollar was trading at 98.70 US cents, up from from yesterday's close of US97.78c.

Since 7am, the "Aussie" has traded between US98.70c and US98.56c.

With little action on markets today, the dollar was in a holding pattern until the release of US consumer price index (CPI) data on Friday night (AEDT), Commonwealth Bank currency Strategist Joe Capurso said.

"It's been a pretty quiet day," Mr Capurso said.

"The market is in wait and see mode until the next data point, which is the US CPI on Friday."

The median market forecast is for prices in the US to have risen 0.2 per cent in August, with year on year inflation up 0.1 per cent.

The reason the data is important to traders is that a weak result could give the US Federal Reserve cause to re-engage its quantitative easing program.

The Fed said last night (AEDT) that it saw a need "before long" to provide additional stimulus to prop up the US economy.

There was broad consensus on the idea that such action was likely to be swift if economic conditions warranted, according to the minutes of the Fed's September 21 policy meeting, published overnight.

The US central bank's policy-making arm, the Federal Open Market Committee (FOMC), said in a brief statement at the end of the minutes that the central bank was prepared "to provide additional accommodation if needed" to support the recovery.

"Such an indication accorded with the members' sense that such accommodation may be appropriate before long, but also made clear that any decisions would depend upon future information about the economic situation and outlook," the minutes said.

Mr Capurso said Friday's CPI would affect the Aussie.

"It could be the night we get to parity," he said.

"Until then, put your feet up, relax and wait for the sunshine."

The Aussie hasn't reached one US dollar since it was floated on foreign exchange markets on December 8, 1983.

Meanwhile, Australian bonds were mixed at noon.

At midday today on the Sydney Futures Exchange, the December 10-year bond futures contract was at 94.955 (implying a yield of 5.005 per cent), steady with its previous close.

The December three-year bond futures contract was at 95.110 (4.890 per cent), down from 95.130 (4.870 per cent).