Interpac Business and Migration Solutions Melbourne Australia

（September 30, 2010）
THE Australian dollar fell from near two year highs following weak building approvals data as investors judge that an interest rate increase next week is less likely.

At 12pm (AEST) today, the local unit was at US96.85c, down US0.17c from yesterday's close of US97.02c.

Overnight, the "Aussie" reached a fresh 26 month high of US97.31c, according to Reuters data.

Since 7am (AEST) today, the currency has traded between US96.79c and US97.11c.

At 11.30 (AEST), data from the Australian Bureau of Statistics showed building approvals had fallen 4.7 per cent in August.

ICAP senior economist Adam Carr said it was looking less likely that the Reserve Bank of Australia would increase the cash rate when it meets on Tuesday.

"There's no strong case for the RBA to hike next week," Mr Carr said.

"We've just seen a fall in building approvals for August, we've seen credit growth anaemic and at it's lowest since the 1980s and we learned today that house prices have fallen."

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Mr Carr said the Aussie may reach parity with the US dollar if the US Federal Reserve does decide to engage in quantitative easing - buying of Government securities in order to pump money into the economy.

"I think it's all dependant on QE," he said.

"If they look like they're undecided or that they're going to delay, I think the Aussie dollar will probably drop towards US95c.

"And if they rule it out, then I think we'll be at the 93 cent level."

Mr Carr said the domestic currency was likely to trade between US96.80c and US97c for the rest of the day.

(Source:news.au)