Dollar slightly down after Christmas

THE Australian dollar has dropped slightly amid low trading volumes after Christmas.

THE Australian dollar has dropped slightly amid low trading volumes after Christmas.

At 1700 AEDT today, the Australian dollar was at 101.50 US cents, down a tenth of a cent from 101.60 US cents on Friday afternoon.

National Australia Bank currency strategist Emma Lawson said she expected very little movement on Wednesday or Thursday as the market waited for an auction of government bonds in Italy on Thursday (European time).

"This is the main event that people are looking to, in the absence of any other information,'' she said.

"There is no expectation that it will be a failed auction, but there are concerns around what price they will get it away, and we can expect relative stability before that event.''

Ms Lawson said there was some movement in other currencies (US dollar and Japanese yen) based on the US Treasury Currency Manipulation Report released overnight, but this had not affected the Aussie dollar.

The report had criticised Japan for entering the currency market to hold back the yen's price rise.

"On the 30th (of December), there is the Chinese HSBC manufacturing PMI (purchasing managers' index) - that could move the market somewhat,'' Ms Lawson said.

"I don't think there's high conviction with markets at the moment, so it would be relatively easy for us to fall below parity again even on either of those two events.

"We do warn at this time of year that any sharp moves to the upside or downside is not reflecting the underlying mood, it is much more characteristic of liquidity conditions.''