Dollar falls further after trade data

THE Australian dollar has fallen after a larger than expected widening in the country's trade deficit.

The Reserve Bank Of Australia in Martin Place.

THE Australian dollar has fallen after a larger than expected widening in the country's trade deficit.

At 12.00 AEST on Wednesday, the currency was trading at 102.32 US cents, down from 102.97 US cents on Tuesday.

Official data showed the trade deficit widened to $2.027 billion in August, with exports down 3.0 per cent and imports down 1.0 per cent.

Commonwealth Bank currency strategist Joseph Capurso said the Australian dollar fell immediately after the data's release.

"I think commodity prices were a major part of that story, and the Aussie quickly lost over 20 points," he said.

"But the medium term outlook for the Aussie economy hasn't changed a great deal, so we should get a bottom on the currency price sometime today.

"I think what we're seeing is a temporary weakness in the Aussie dollar - it should start to recover in the evening session today, or tomorrow."

The Australian dollar fell below 103 US cents on Tuesday after the Reserve Bank of Australia cut the cash rate by 0.25 per cent, bringing the rate to 3.25 per cent.

Meanwhile, bond prices were higher at noon.

The December 10-year bond futures contract was trading at 97.155 (implying a yield of 2.845 per cent), up from 97.125 (2.875 per cent) at Tuesday's close.

The December three-year bond futures contract was at 97.710 (2.290 per cent), up from 97.700 (2.300 per cent).