Dollar lower after poor inventories data

THE dollar ended the local session lower despite regaining some of its weekend losses.

THE dollar ended the local session lower despite regaining some of its weekend losses.

At 5pm (AEDT), the dollar was trading at 96.52 US cents, down from Friday's close of 97.18 cents.

Since 7am (AEDT), the local unit traded in a range between 95.83 US cents and 96.90 cents.

It lost ground after an unexpected fall in business inventories, which raised the likelihood a negative gross domestic product (GDP) reading for the September quarter.

CMC Markets foreign exchange dealer Tim Waterer said it was a day of indecisive trade for most currencies, not just the Australian dollar.

"In terms of our currency, it started off on quite a bright note, it was around 96.90 US cents before midmorning before it slumped to below 96.00 US cents," he said.

"When some economic data came out, there were steeper falls on our stock market.

He said the local unit rebounded in the early afternoon, tracking a lift in equities.

"We did see some bargain hunters creep in at midday or 1pm (AEDT) and that brought both the currency and the (ASX/S&P 200) index off the session lows," Mr Waterer said.

"It's indecisive trade at the moment. The market is not buying or selling with any conviction one way or the other.

"We may get a little bit of direction once Europe comes in.

"We'll be closely watching how the euro gets treated in the offshore session tonight and I expect that will have a large influence in what the AUD does overnight."

Mr Waterer said overseas influences would be more of a driver for the Australian dollar in the coming days.

"We still have the Korean situation and the Eurozone debt situation are still very much at the forefront of traders' minds at the moment and it is causing a reluctance step into some of the high-yielding currencies," he said.

The US and South Korean navies are staging their biggest-ever joint exercise, a show of force against North Korea which last week launched an artillery strike on a South Korean island.

EU governments yesterday approved an €85 billion ($115.59 billion) bailout for Ireland to help it withstand the weight of its banking crisis.

Local data out this week includes September quarter balance of payments tomorrow, GDP figures for the September quarter on Wednesday and retail trade for October on Thursday.

"Potentially if we see some better numbers coming out, that could place the market focus back on the fundamentals of the economy here and the Aussie dollar could find some support off that," Mr Waterer said.

He said the big piece of data this week would be the release of the US unemployment rate on Friday.

"That will be a very important yardstick as to where the global recovery is at."