Dollar lower on stimulus speculation

THE Australian dollar is lower on falling expectation of economic stimulus by the US central bank.

THE Australian dollar is lower on falling expectation of economic stimulus by the US central bank.

At midday AEST today, the local unit was trading at 104.30 US cents, down from from 104.39 cents on Friday.

CMC foreign exchange dealer Tim Waterer said Australian markets were very quiet today, but some positive data out in the US over the weekend had pushed the local currency down slightly.

"The Aussie dollar is trading at the lower end of its range from the last few weeks, although nothing much has happened today,'' he said.

"Based on the better crop of US data we've seen over the past week, the reduced likelihood of full-blown QE3 (quantitative easing) is supporting the US dollar, and that's causing the Australian dollar to retreat a little bit.''

The US dollar rallied on the weekend, after the release of the Thomson Reuters/University of Michigan index of consumer sentiment, which rose to 73.6 in August, from 72.3 the previous month.

This was the index's highest position since May.

A lack of local data had also kept the currency subdued, Mr Waterer said.

However, the release on tomorrow of minutes from the Reserve Bank of Australia's August 7 meeting, would be influential for markets.