Dollar weakened by surging greenback

US money, dollarThe Australian dollar has dropped back below 78 US cents following a surge in the greenback and suggestions that the Reserve Bank is willing and able to cut rates again.

At 0700 AEDT on Friday, the local currency was trading at 77.74 US cents, down from 78.16 cents on Thursday.

The Australian dollar’s descent began on Thursday, when RBA deputy governor, Philip Lowe, said the currency needed to fall further and that interest rates could afford to be cut again.

“I don’t think we’re at the point where monetary policy is not effective. We’re some way from that, which means we have some scope to lower interest rates again if that’s appropriate,” Lowe said.

The Australian dollar was also weakened by a surging greenback, after the European Central Bank’s bond buying announcement sent the euro tumbling to an 11 year low against the US dollar.

The ECB said it would begin a 1.1 trillion euro ($A1.56 trillion) bond buying program next week.

“The US dollar moved higher again overnight against its major crosses,” National Australia Bank senior economist, David de Garis, said.

“This came despite little in the way of any surprise from the ECB and a higher than expected weekly US jobless report, even if it was affected by the harsher than expected weather.”

A fall in the iron ore price was also putting pressure on the Australian dollar, de Garis said.

Coming up on Friday night, financial markets will turn their attention to the release of US nonfarm payrolls for February.

AAP

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