Dollar lower as traders take profits

THE dollar has backed away from highs made after the outcome of the RBA's August board meeting.

The dollar has held onto gains after rallying on the back of yesterday's rate cut.

THE Australian dollar has backed away from the highs made after the outcome of the Reserve Bank of Australia's August board meeting.

At 12pm AEST today, the local unit was trading at 89.60 US cents, down from 89.81 cents yesterday.

During the offshore session last night, the currency peaked at 90.07 US cents, its highest level since last Wednesday.

Yesterday afternoon, the RBA cut the cash rate by a quarter of a percentage point to a new record low of 2.5 per cent, after making its previous reduction in May.

A rate cut would normally put downward pressure on the Australian dollar but the fact that the RBA gave no indication there would be further cuts helped push the currency to a one-week high.

ForexCT head of research Steven Dooley said the Australian dollar had struggled to keep rallying despite the release of some encouraging housing finance figures during this morning.

The number of home loans approved in June rose 2.7 per cent, the six consecutive monthly gain, the Australian Bureau of Statistics said.

"I think there has been a little bit of selling interest up there at the 90 US cent level," Mr Dooley said.

"That might have capped its gains."

Mr Dooley said the Australian dollar also would have come under pressure from falling share markets in Asia and Australia.

The market will now focus on the release of official employment figures tomorrow morning.

The median forecast from an AAP survey of 11 economists is for the unemployment rate to rise to 5.8 per cent, from 5.7 per cent in June.

The number of people with jobs is expected to have risen by 10,000 in July.

Meanwhile, the Australian bond market was firmer at noon.

At 12pm AEST today, the September 10-year bond futures contract was trading at 96.300 (implying a yield of 3.700 per cent), up from 96.280 (3.720 per cent) yesterday.

The September three-year bond futures contract was at 97.470 (2.530 per cent), up from 97.440 (2.560 per cent).

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