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Dollar down off US stocks

The Australian dollar is lower after heavy falls on the US stock market on Friday night.

At 0700 AEST on Monday, the currency was trading at 96.24 US cents, down from 96.41 cents on Friday.

The currency fell on Friday night as weakness on Wall Street pushed the US dollar higher, BK Asset Management MD Kathy Lien.

The Dow Jones Industrial Average, the S&P 500 and the Nasdaq all lost more than one per cent.

Lien said the dynamic changed in the US currency market on Friday night.

“Foreign exchange traders are in the midst of trying to figure out whether to buy or sell the dollar when stocks fall,” Lien said.

“For most of this week, lower stocks have meant a lower dollar as investors reduce exposure.

“However today that dynamic changed with the dollar rising against higher beta currencies such as the Euro, the British pound and the Australian and New Zealand dollars.”

The Australian dollar is facing a potentially busy week of trading, with several key pieces of economic data due to be released.

The Australian Bureau of Statistics releases gross domestic product figures on Wednesday, while key employment figures will be released in the US on Friday.

Meanwhile, the Reserve Bank of Australia will hold its monthly board meeting on Tuesday, where it is expected to keep the cash rate on hold at 2.75 per cent. AAP

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