Dollar lower on Eurozone debt concerns

THE dollar has opened almost half a US cent lower today, as concerns over the eurozone's debt levels continue to dampen risk appetite.

THE dollar has opened almost half a US cent lower today, as concerns over the eurozone's debt levels continue to dampen risk appetite.

At 7am (AEST) today, the local unit was trading at 105.11 US cents, lower from 105.54 US cents at yesterday's local close.

Since 5pm (AEST) yesterday, the dollar has traded between a low of 104.50 US cents and a high of 105.58 cents.

Overnight (AEST), Standard & Poor's Ratings Service lowered its long-term outlook for the United States' sovereign debt to "Negative" from "Stable" due to risks from the country's growing deficit.

S&P noted that the deficit grew to 11 per cent of gross domestic income in 2009, higher than the average of two per cent to five per cent over the previous six years.

GFT Forex director of currency research Kathy Lien said the news saw investor risk appetite take a hit and the Australian dollar lose value.

"At the end of the day, the US dollar is not finding many buyers and that's keeping the dollar above 105 US cents for the time being," Ms Lien said.

"But compared to many other currencies, the dollar has held up fairly well; it's still above 105 US cents."

Also overnight (AEST), more bad news emerged on Europe's debt crisis, as investors fretted over a possible Greek default and as Portugal began discussions on a financial bailout.

"That's really what started the initial wave of the selling during the European session... on continued concerns over Greece and the restructuring of their debt," Ms Lien said.

During the local session today, the Reserve Bank of Australia (RBA) releases minutes of its April monetary policy meeting.

The central bank has kept the cash rate steady at 4.75 per cent since November last year.

Currency traders will be watching the minutes closely for any changes to the central bank's outlook on the economy, Ms Lien said.

"The Reserve Bank is still going to be positive on the outlook for the Australian economy, but I think they're going to be much more reserved than they have been in previous months, partly due to China slowing, partly due to higher oil prices and also due to the Japanese earthquakes."