THE dollar was weaker at noon, pulling off a 28-year high after falling victim to profit taking during the offshore session and a weak start to local shares.
The Aussie's offshore peak of 99.18 came after better than expected local employment numbers yesterday increased the chance of an interest rate rise in November.
At noon, the Australian dollar was trading at 98.02 US cents, down from yesterday's close of 98.37 cents.
Since 7.00am (AEDT) on Thursday, the local unit traded in a tight range between 98 US cents and 98.32 cents.
4Cast financial markets head of research Ray Attrill said the unit was lower on Friday due to a small correction in the recent downward trend of the US dollar.
"It was a typical recoil from a key level. We can put the parity party campaign on ice, at least for the time being," he said.
"US equities were softer in the afternoon and there's that great irony at the moment that any scrap of poor US economic data, that's not as bad as people are expecting, is sort of diluting hopes of quantitative easing from the Fed.
"And that's having an impact in terms of the US dollar."
Friday offered little in the way of risk appetite for currency traders, with local shares lower in early afternoon trade.
At 12.04pm (AEDT), the benchmark S&P/ASX200 index was down 0.39 per cent at 4673 points, while the broader All Ordinaries index had fallen 0.34 per cent to 4730 points.
The unit's withdrawal from its 28-year high of 99.18 US cents - the highest it has been since it was floated in December 1983 - started after the publication of better than expected US jobs data overnight.
Initial jobless claims for the week ending October 2 fell to 445,000, a drop of 2.4 per cent from the prior week and the second consecutive week of decline, the US Department of Labor said.
The previous week's claims figure was revised upward to 456,000, from 453,000.
The report came ahead of Friday's eagerly anticipated Labor Department report on September employment.
The consensus forecast is the economy created zero jobs and the unemployment rate rose a tenth point to 9.7 per cent.
But a Federal Reserve official raised doubts that pumping more money into the US economy would do much to strengthen the recovery and spur businesses to hire.
Richard Fisher, president of the Federal Reserve Bank of Dallas, is sceptical that businesses would take out new loans to expand or help pay for new workers even if the Fed were to take action to drive down interest rates even more.
He suggested that financing problems aren't the main force holding back companies, but rather, lacklustre customer demand.
Mr Attrill said the news contributed to the strength of the US dollar and knocked the local unit off its highs.
