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Dollar falls overnight

dollar, coin, signThe Australian dollar is lower after the Reserve Bank indicated there is room to cut interest rates further.

At 0700 AEST on Thursday, the local currency was trading at 73.77 US cents, down from 74.17 cents on Wednesday.

Kathy Lien, MD, BK Asset Management,  said Wednesday’s inflation data and a speech by RBA governor Glenn Stevens had been the main factors impacting the dollar overnight.

The consumer price index (CPI), the key measure of inflation, lifted 0.7 per cent in the June quarter, for an annual rate of 1.5 per cent, below expectations.

Stevens said an interest rate cut was still possible, but evidence of further economic weakness will not automatically trigger such a move.

“While he said monetary policy is about right at the moment, he also added that further rate cuts is on the table,” Lien said.

Westpac strategist, Imre Speizer, tipped the Aussie to move fall further, towards 73.30 US cents on Thursday.

The “eventual resumption of the strong US dollar trend should weigh on the Australian dollar during the next few months”, he said.

AAP

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