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Dollar down on RBA boss' comments

THE Australian dollar has fallen after Reserve Bank governor Glenn Stevens said the local currency was likely to depreciate in the future.

American retail spending figures will be crucial for the currency market. (AAP Image/Julian Smith)
American retail spending figures will be crucial for the currency market. (AAP Image/Julian Smith)

THE Australian dollar has fallen after Reserve Bank governor Glenn Stevens said the local currency was likely to depreciate in the future.

At 12pm AEDT today, the local unit was trading at 95.21 US cents, down from 96.05 cents yesterday.

Mr Stevens told a business function today that the Australian dollar would eventually fall.

"These levels of the exchange rate are not supported by Australia's relative levels of costs and productivity," he said.

"Moreover, the terms of trade are likely to fall, not rise, from here.

"So it seems quite likely that at some point in the future the Australian dollar will be materially lower than it is today."

The comments drove the Australian dollar lower, Invast senior technical strategist Vito Henjoto said.

"There is support for the Aussie around the 95 to 95.25 US cent level and it will need to trade higher than this level before we see any strong buyback into the market," Mr Henjoto said.

"Medium term downside risk for the Australian dollar/US dollar has increased with the RBA unlikely to cut rates further.

"Traders remain bearish on the pair until they see a strong sign of reversal."

Meanwhile, bond futures prices were higher.

At 12pm AEDT today, the December 10-year bond futures contract was trading at 96.060 (implying a yield of 3.940 per cent), up from 96.030 (3.970 per cent) yesterday.

The December three-year bond futures contract was at 97.010 (2.990 per cent), up from 96.950 (3.050 per cent).

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Original URL: https://www.news.com.au/finance/markets/dollar-down-on-rba-boss-comments/news-story/ac8412c6f6eb0b8b13674c0dee9b8439