Dollar drops further

fail, down, dollar, business, fall, decline, dropThe dollar has hit a fresh six year low as the weakest business confidence in almost two years reminds traders another interest rate cut is likely.

At 0700 AEDT on Wednesday, the local currency was trading at 76.18 US cents, down from 76.47 cents on Tuesday.

The unit hit 76.04 US cents on Tuesday night, which was the lowest point since May 2009, and approached those levels again on Wednesday morning.

The currency continued to take a hit during offshore trade after the National Australia Bank’s business confidence index for February dropped to its lowest level in almost two years.

“The business outlook definitely had an impact on the Australian dollar during the Australian session and that carried on into the London session,” ANZ, senior foreign exchange manager, Sam Tuck said from Auckland.

The reading reminded financial markets that the Reserve Bank of Australia (RBA) would likely cut rates again as the US Federal Reserve considers raising rates, giving the US dollar a boost.

“One of the reasons the Australian dollar is highly reactive to news like this is the clear easing bias from the RBA,” said Tuck.

AAP

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