The Australian dollar hit a new three-month low as Asian markets remain closed due to Lunar New Year public holidays.
Arpund midday, the local unit was trading at 102.59 US cents, down from 103.01 cents on Monday. The currency fell to 102.48 US cents on Tuesday morning, its lowest level since October.
Stephen Dooley, head of research at ForexCT, said the currency had fallen sharply following the Reserve Bank of Australia’s February board meeting last Tuesday.
The RBA kept the cash rate on hold but, in a statement accompanying the decision, said it had room to cut further if necessary.
Mr Dooley said the tone of the statement was more dovish than the market had expected.
‘‘We’ve fallen from 104.80 US cents to 102.50 cents, a fall of more than 200 points, and it all stems from last week’s RBA statement,’’ he said. ‘‘They hinted they might cut rates a little more and that’s seen the Australian dollar move pretty sharply lower over the last week and a half.’’
Mr Dooley said he expected the Australian dollar to drop further over the next week, to 101.70 US cents against the greenback.
‘‘The Australian dollar has been trading in a range - every time it comes down to 101.70 US cents it’s a big buying opportunity, and every time it goes up to 106 US cents it’s seen as a selling opportunity, and that’s a pattern we’ve been in since July,’’ he said.
As the dollar headed downwards, Mr Dooley said there was a possibility it would return to parity with the US dollar later this year.
The Australian bond market was also weaker at noon. The March 10-year bond futures contract was trading at 96.545 (implying a yield of 3.455 per cent), down from 96.580 (3.420 per cent) on Monday.
The March three-year bond futures contract was at 97.190 (2.810 per cent), down from 97.230 (2.770 per cent).