Australian dollar weaker after BOJ intervention

THE Australian dollar finished half a US cent softer after Japan's central bank intervened in global currency markets.

THE Australian dollar finished half a US cent softer after Japan's central bank intervened in global currency markets to keep a lid on the yen's rising value.

At 5pm (AEST), the Australian dollar was trading at 106.89 US cents, down from 107.39 cents yesterday.

Since 7am (AEST), the local unit moved between 106.50 US cents and 107.80 US cents.

The local unit fell against the US dollar and yen today after Japan intervened in currency markets to stem the rising Japanese currency.

Japan's Finance Minister Yoshihiko Noda said a strong yen could hurt the economy and slow Japan's efforts to recover from its March 11 earthquake and tsunami.

TD Securities head of Asia-Pacific research Annette Beacher said the market had expected Japan's central bank to act on the rising yen.

"Noda's always talking about watching the yen closely and all this week he's been saying that the yen has been out of line with fundamentals ... and it (the intervention) was pretty well telegraphed,'' Ms Beacher said.

"It's a slow round-the-world coordination of getting the yen down against the (US) dollar, so the Aussie has lost ground pretty much over the course of today.''

Tomorrow, the Reserve Bank of Australia (RBA) releases its quarterly Statement on Monetary Policy.

"Everyone is just going to be going straight for the CPI (consumer price index) forecasts, given that that was the key driver behind their tightening bias in May,'' Ms Beacher said.

"Now remember in May it was a surprise hawkish report, so I wouldn't be surprised if we get another surprise hawkish report.''

The next focus for the currency market would be overnight on Friday when the US releases non-farm payroll data for July, she said.

"The data has just been so woeful lately that for some, including ourselves, the payroll number is going to be a make-or-break as to how the third quarter is shaping up because the first couple of quarters have been so bad.''

The RBA's trade weighted index was at 76.7 on Thursday at 5.57pm down from 77.0 yesterday.