Dollar falls after RBA rate cut

THE Australian dollar fell following the central bank's decision to cut the cash rate on concerns about global market turmoil.

THE Australian dollar fell following the central bank's decision to cut the cash rate on concerns about global market turmoil.

At 5pm AEDT, the Australian dollar was trading at 101.81 US cents, down from 102.10 cents yesterday.

This afternoon, the Reserve Bank of Australia cut the cash rate by a quarter of a percentage point to to 4.25 per cent.

It was the second consecutive month that the RBA cut the rate, with the central bank citing the likelihood of slowing global economic growth as the reasons for its latest move.

Commonwealth Bank currency strategist Joseph Capurso said the RBA's comments on global economic conditions had somewhat spooked the market.

"They were a bit more bearish about the global economy than the market was expecting, and I think that's why the Aussie dollar dropped a good half cent," he said.

"I think when London opens, it will probably take the Aussie dollar down lower - our near-term target is 101.50 cents.

"That's likely to fall based on the RBA's statement, and also because it will be Europe's first look at the S&P (Standard and Poor) decision to put all the eurozone sovereign debt rating on a rating-watch negative."

On Monday night (European time), the ratings agency warned that 15 of the 17 euro-currency countries could receive a lower credit rating.

It cited five areas of concern: tightening credit conditions, higher risks associated with eurozone debt, disagreements among European policymakers, the high levels of eurozone indebtedness and the risk of recession across the entire currency region in 2012.

Tomorrow, the Australian Bureau of Statistic will release National Accounts for the September quarter.

They are expected to show that gross domestic product (GDP) grew by 1.0 per cent September quarter for an annual rate of 2.1 per cent, according to an AAP survey of 16 economists, conducted last Friday.