Dollar dips below US75c

The local unit has traded in a narrow range, as investors seek direction.

The Australian dollar traded in a narrow band on Wednesday, with little to inspire traders ahead of critical second quarter inflation data due next week.

The Reserve Bank of Australia made its clear on Tuesday that the consumer price index will determine if there is a need to lower interest rates next month.

In the minutes released on Tuesday of its July 5 board meeting, when official interest rates were left unchanged at a record low of 1.75 per cent, the RBA said it will review its economic forecasts in August, and this would also help to determine if a change in interest rates was required.

At 5.35pm (AEST), the Australian dollar was trading at US75.85 cents, compared with US75.04c late on Tuesday.

The Australian could fall further ahead of CPI data on July 27, said Joe Capurso, currency strategist at the Commonwealth Bank of Australia.

“If inflation is low enough in next week’s second quarter CPI, the best guess is still a rate cut in August,” he added.

An interest rate cut next month will see the Australian dollar retreat, said Stephen Innes, senior currency trader at OANDA Australia.

“Fissures are appearing in the yield carry back story that supported the Australian dollar post Brexit,” he added.

- Dow Jones newswires