Australian dollar flat in early trading

The Australian dollar opened little changed this morning amid market speculation the US Federal Reserve was planning to lift the discount rate it charges banks for loans.

At 7am AEDT (9am NZT), the Australian dollar was trading at $US0.9213/14, up slightly from yesterday's close of $US0.9202/05.

Since 5pm AEDT yesterday, the Australian unit moved between $US0.9245 and $US0.9180.

With no hard economic data published during the offshore session, the main driver of the currency market was a rumour the US Federal Reserve was planning to hike the discount rate it charges on direct loans to banks.

"The market loves dwelling on rumours," Latitude FX executive sales manager Steve Jardine said.

"It caused a change in sentiment and the Aussie came off sharply when these rumours went around."

The Fed last raised its discount rate in February, boosting it from 0.5 per cent to 0.75 per cent.

The talk lifted the US dollar against most currencies.

The Fed had not made any announcement on the discount rate as of 7.12am AEDT.

Mr Jardine said the local unit peeled back to its offshore session low as the rumour took hold, but quickly regained its ground above $US0.9200 as US stocks gained.

In New York the Dow Jones Industrial average gained 0.42 per cent to close at 10,779.17 points, while the Standard & Poor's 500 index was down 0.03 per cent at 1,165.82 points.

With no market moving economic data due during the domestic session the local currency is expected to trade in the same range as its offshore session high and low, Mr Jardine said.

- AAP