Dollar continues to fall

THE release of domestic inflation figures did little to arrest the Australian dollar's slide triggered by continued negative news out of the eurozone.

Australian dollar

THE release of domestic inflation figures did little to arrest the Australian dollar's slide triggered by continued negative news out of the euro zone.

At 12.00 (AEST) on Wednesday, the Australian dollar was trading at 102.23 US cents, down from 102.89 on Tuesday.

The Australian dollar dipped briefly following the release of the consumer price index (CPI) figures shortly before noon, but quickly recovered.

Commonwealth Bank currency strategist Joseph Capurso said low inflation figure gave the Reserve Bank of Australia (RBA) scope to cut the official interest rate in August.

"The CPI data was a tad weaker than expected, but the bottom line is inflation is very low," Mr Capurso said.

However, he added: "Whether the RBA choose to do so will depend on its perception of the global economy".

Weaker-than-expected manufacturing data out of Europe overnight and continued euro zone debt concerns prompted the Australian dollar to fall, he said.

"Volatility has been rising, and the Aussie does not like volatility.

"I think we will see the Aussie keep easing today as the news out of Europe is not great," Mr Capurso said.

Meanwhile, Australian bond prices were mixed at noon.

At 12.00 (AEST) on Wednesday, the September 10-year bond futures contract was trading at 97.290 (implying a yield of 2.710 per cent), up from 97.270 (2.730 per cent) on Tuesday.

The September three-year bond futures contract was trading at 97.860 (2.140 per cent), unchanged from Tuesday's close.