Dollar loses steam on RBA minutes

DOLLAR almost US1c lower, after minutes from the central bank's April board meeting confirmed that it was in no hurry to raise rates.

THE dollar was almost US1c lower at noon (AEST), after minutes from the central bank's April board meeting confirmed that it was in no hurry to raise rates.

At midday, the local unit was trading at US104.63c, down from today's local close of US105.54c.

Since 7am, the dollar has traded between a low of US104.62c and a high of US105.13c.

The Reserve Bank of Australia (RBA), at 11.30am, released the minutes of its April monetary policy meeting, which said that disasters in Japan and Queensland had not changed the bank's medium-term economic and inflationary outlook for Australia, although they had created some uncertainty.

Since the minutes were released, the Australian dollar lost around a third of a US cent.

Commonwealth Bank currency strategist, Joseph Capurso, said the minutes did not reveal substantial changes in the RBA's stance on possible future cash rate rises.

"The Reserve Bank says that first quarter economic growth is probably going to be down more than they previously expected because of the floods and the cyclone," Mr Capurso said.

The market was focused more, however, on news overnight (AEST) that Standard & Poor's Ratings Service had lowered its long-term outlook for United States' sovereign debt to "Negative" from "Stable", due to risks from the country's deficit.

"People are trying to come up with a judgement on what are the chances that the US credit rating is downgraded," Mr Capurso said.

"We think there's a potential there but I don't think it's going to happen in the near-term; (not) this year."

The Australian Bureau of Statistics (ABS) releases producer price index (PPI) data on Thursday, followed by consumer price index (CPI) figures on Wednesday next week.

Mr Capurso did not expect the Australian dollar to move much on either data.

"The PPI almost never impacts the Aussie," he said.

With the CPI, "the RBA will be... stripping out volatile items (like food and petrol) and... they'll be quite happy with underlying inflation being just over two per cent.

"The impact on the Aussie will, again... be very small because the market isn't expecting the RBA to be lifting rates very much this year."

Meanwhile, the local bond market was firmer at noon.

At noon (AEST), the June 10-year bond futures contract was trading at 94.490 (implying a yield of 5.510 per cent), up from 94.390 (5.610 per cent) yesterday.

The June three-year bond futures contract was at 94.920 (5.080 per cent), higher from 94.810 (5.190 per cent).