Australian Dollar Falls for Second Day

The Australian dollar fell for a second day on speculation a decline in commodity prices will deter traders from buying the currency.

The local dollar traded near a six-month low after the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials slid the most in two weeks on Aug. 22. The Australian dollar also weakened on bets the central bank will cut interest rates at a policy meeting next week.

The Australian dollar fell 0.5 percent to 86.25 U.S. cents as of 10:37 a.m. in Sydney, from 86.65 cents in New York late last week. It will trade between 86 and 88 cents this week, Morriss said.

Prices of commodities influence the Australian dollar because raw materials account for about 60 percent of the nation's exports. Gold, Australia's third-most valuable commodity export, fell 1.1 percent on Aug. 22 as a rebound in the U.S. dollar eroded its appeal as an alternative investment.

Australian Dollar Falls for Second Day, Bloomberg
8/25/2008 6:25:17 AM