Dollar lower ahead of RBA decision

THE Australian dollar is lower ahead of the Reserve Bank of Australia's interest rate decision.

At 7am AEST today, the currency was trading at 102.54 US cents, down from 102.72 US cents yesterday afternoon.

The Reserve Bank of Australia (RBA) will announce its interest rate decision at 2.30pm AEST today after its monthly board meeting.

All 13 economists surveyed by AAP last week expected the RBA to keep the cash rate unchanged at three per cent.

But BK Asset Management managing director Kathy Lien said the market had put the odds of a rate cut at around 55 per cent.

Ms Lien said that while a rate cut would push the Australian dollar below 102 US cents, traders would also look closely at the statement accompanying the decision.

She said a cautious and dovish statement would weigh on the currency, even if the cash rate remained unchanged.

"Whether the AUD (Australian dollar) holds above 1.02 or drops to fresh two-month lows will hinge upon the tone and action of the RBA," she said. "Given the potential for a rate cut and the significance of this event, the risk is to the downside."

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