PERTH: The Australian dollar has fallen to a one-week low after the Reserve Bank left the door open to more interest rate cuts, if needed.
The Australian dollar was worth US79.67c at noon (AEST), down from US80.12c, yesterday.
Late in the morning it fell as low as US79.57c, its weakest level since May 12.
The RBA cut the cash rate on May 5, but the statement accompanying the decision failed to give guidance on what, if any, future action the central bank might take on rates.
The minutes of its May meeting were released today, and clarified that the lack of guidance on rates did not mean the bank was ruling out future moves.
Western Union Business Solutions currency strategist Steven Dooley said he was surprised by the market’s reaction to the Reserve Bank minutes.
“It is in line with what we heard yesterday from (RBA deputy governor) Philip Lowe that the RBA still has the potential to cut rates if the need arises,” he said.
Mr Dooley doesn’t expect the Australian dollar to fall too far below US79.50c, and said the Australian dollar could strengthen in the next couple of weeks.
Financial markets were now waiting for the release of the minutes of US Federal Reserve’s latest policy meeting, he said.
Traders and analysts will be looking for hints about when the Fed is likely raise it’s interest rate this year, if at all.
Meanwhile, the Australian bond market was weaker.
The June 2015 10-year bond futures contract was trading at 97.040 (implying a yield of 2.960 per cent) at 1200 AEST, down from 97.125 (2.875 cent).
The June 2015 three-year bond futures contract was at 97.870 (2.130 per cent), down from 97.930 (2.070 per cent).
