THE dollar nudged fresh three-year highs to close up half a US cent while bond markets idled as traders waited for an update from US Federal Reserve chairman Alan Greenspan.
At 5pm AEST the Australian dollar was at 62.38 US cents from 61.88 at yesterday's close.
The local currency regained 62 US cents overnight as the US dollar weakened, and today flashed through to a top of 62.44, a level not traded since February 24, 2000.
However, most of the rally was offshore as the US dollar weakened and from the early low of 62.24 in local business the Australian dollar's gains were muted.
National Australia Bank strategist Michael Jansen said while the currency performed reasonably to get to its highs, it lacked momentum.
"That it is struggling to put some distance between the old high and new high is a bit troubling and the market has got itself a little long in the process so we may see some consolidation before we go up again," Mr Jansen said.
"There's also the theory that there's a lot of options at 62.50 and we got close to those today and the owner of those structures is keeping (that level) from trading so we may be stuck in a 62.00 to 62.50 range."
However, he said it was probably just a matter of time before the currency made a stab for 63 US cents. The Australian dollar was at 74.55 yen from 74.26 and 56.11 euro cents from 56.40.
The euro was at 1.1114 US dollars from 1.0975 and 132.909 yen from 131.74.
The US dollar was at 119.56 yen from 120.04.
The Australian bond market finished mixed after a day of directionless trading as the market awaited testimony from Dr Greenspan.
At 4.30pm AEST the yield on the Commonwealth Government May 2013 bond was 5.275 from 5.295 per cent at yesterday's close. The yield on the November 2006 bond was steady at 4.745 per cent.
On the Sydney Futures Exchange the June 2003 10-year bond futures contract was 94.705 from 94.690 at yesterday's close and the three-year contract was steady at 95.25.
"Bonds just went sideways today," Mr Jansen said. "It was a tight range in middling volume with little happening in our timezone due to a data vacuum. "We're very much stuck in the middle of the range right now."
He said even in the US Treasury market there was a lot of confusion.
"The bond market is standing back to get a good idea of what chairman Greenspan is thinking when he talks this week as he chose not to provide a bias (to interest rates) at his last meeting and the data has been a little better than expected," Mr Jansen said.
"So for a lot of traders they are waiting for direction or at least some range breaks as the ranges have been quite robust, so it is a disincentive to take big positions right now."
Dr Greenspan will deliver his semiannual report on monetary policy to the US House of Representatives tomorrow morning local time.
The 90-day bank bill rate was 4.810 from 4.800 per cent and the 180-day rate 4.730 from 4.720.
At 4pm AEST the Reserve Bank of Australia Trade Weighted Index was at 56.1 points compared with 56.0 at yesterday's close.