Australian dollar below US73.5c in late trade

The local unit is still reeling from the Reserve Bank’s inflation downgrade.

The Australian dollar is still reeling from the Reserve Bank’s inflation downgrade.

At 5.35pm AEST on Monday, the local unit was trading at 73.48 US cents, down from 73.26 cents on Friday.

“It’s been super slow as markets digest US non-farm payrolls and of course the big news from the RBA on Friday, lowering those inflation forecasts,” Western Union Business Solutions currency strategist Steven Dooley said.

“The Aussie has been trading in a 40 pip band.” The RBA now expects underlying inflation to remain near the lower limit of its two to three per cent target band throughout 2016.

Most economists doubt last week’s rate cut was a one-off, forecasting another in August after the third quarter inflation report.

Looking ahead, a local consumer confidence report on Wednesday and US retail sales on Friday night would be key events for the currency, Mr Dooley said.

He said the greenback has bounced from an important support level since last week.

“The US dollar, which has been going through a weakening phase for the last three or four months, suddenly looks like it’s seeing some signs of life,” Mr Dooley said.

“If it can continue higher that’ll see further losses in the Aussie.”

AAP