Dollar down as euro banks fail stress tests

THE dollar was three quarters of a US cent lower, dragged down by Friday's news eight European banks had failed stress tests.

THE dollar was three quarters of a US cent lower, dragged down by Friday's news eight European banks had failed stress tests.

At 5pm today, the dollar was trading at 106.00 US cents, down from 106.73 US cents on Friday.

Since 7am, the local unit traded between 105.85 US cents and 106.55 cents.

The European Banking Authority said eight banks had flunked the assessments of whether they had sufficient capital to withstand financial disaster scenarios.

RBC fixed income and currency strategist Michael Turner said the news was still pushing the dollar lower today.

"It's been a pretty soggy session for the Aussie today. People are still digesting what's happened with the stress tests," Mr Turner said.

"Bonds have been rallying pretty heavily. The euro's been pretty heavy most of the day and the Aussie has been dragged lower."

Tomorrow, the Reserve Bank of Australia releases minutes for its July 5 board meeting, when it decided to leave the cash rate unchanged at 4.75 per cent.

"Whatever new pieces of information they give us or shifts in language almost by definition will have to be less hawkish than what they've given us over the past few months," Mr Turner said.

"So it's hard to see that the Aussie's going to find any support from that."

He said there was no major economic data due overnight to move the Australian dollar.

The RBA's trade weighted index was at 76.7, down from 77.3 on Friday.