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Dollar drops on greenback strength

cash, money, US dollarThe Australian dollar is lower, coming under pressure from a stronger US dollar and the release of weaker local housing data last week.

At 0700 AEST on Monday, the local unit was trading at 76.69 US cents, down from 76.85 cents on Friday.

The greenback enjoyed a strong rally last week against most of the major currencies after recent solid economic data increased the chances that the Fed would raise its rate sooner rather than later.

BK Asset Management MD, Kathy Lien, said increased optimism about the US economy was pushing the Australian dollar lower.

“Investors bought US dollars aggressively this week with the gains on Friday taking the greenback to its strongest level against the euro in three weeks,” she said.

“Market participants are rushing to position for a June rate hike.”

Data out on Friday showed that the number of home loans approved in February rose 1.2 per cent, well short of market expectations of a three per cent rise.

Lien said that this data also put the Australian dollar under pressure along with some strong Chinese inflation data.

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