The Australian dollar is lower against a stronger US dollar and after data showed local business conditions are at four-year lows.
The dollar traded earlier today at 91.2 US cents, down from 91.8 cents on Monday.
The local share market rallied however to close at its highest level in three months.
At the close on Tuesday, the benchmark S&P/ASX200 index was up 49 points, or 0.96 per cent, at 5,157.7, while the broader All Ordinaries index was up 47.5 points, or 0.93 per cent, at 5,141.6.
On the ASX 24, the September share price index futures contract was 50 points higher at 5,110, with 28,769 contracts traded.
The Australian dollar was not the only currency under pressure against the US dollar, with the euro, yen and kiwi also lower, Westpac senior currency strategist Sean Callow said.
“It’s a bit puzzling because we’ve had some better news for Australia recently, particularly commodity prices,” Mr Callow said.
You might like
“Yesterday we had a big jump in the gold price,
“Iron ore, Australia’s top export, rose 4.2 per cent to its highest level since the middle of April and yet the Aussie is really struggling.
“There’s a little bit of frustration as to why it hasn’t performed better.
“It just gives the impression of the northern summer doldrums markets, where a lot of the Japanese are on holidays and it’s the same in Europe and the US too.”
The Australian dollar also came under pressure following the release of National Australia Bank’s July business survey, which showed confidence was at its lowest point since November last year, and trading conditions were at four-year lows.
“It was a pretty lacklustre report and that certainly didn’t help the Aussie’s cause,” Mr Callow said.
Business conditions in July remained at their weakest level since May 2009 at -7, with better trading and employment conditions weighed down by deteriorating profitability, the National Australia Bank monthly business survey said.
NAB said the weakness in business activity and profitability was likely the key driver of weaker confidence.
Stay informed, daily
Uncertainty over the timing of the federal election, which had not been called when the survey was conducted, possibly kept businesses wary as well, NAB said.
The survey said solid improvements in business conditions in retail, mining, recreation and personal services were offset by weaker conditions in finance, business, property, construction and transport.
“The still weak set of industry conditions suggests the lower Australian dollar is providing little support to activity domestically,” NAB said.
“Forward looking indicators of activity suggest little near-term revival in business conditions, with forward orders, employment conditions, stocks and capacity utilisation all remaining well below long-run average levels.”
The survey said confidence remained lacklustre in mining as businesses seemed pessimistic about future investment, given slowing global demand and softening commodity prices.
Confidence among construction firms and manufacturers was also waning.
“Not even a falling dollar has been able to revive hopes for manufacturers,” NAB said.
“The only sectors to report better confidence were in retail and wholesale, where conditions improved in July and the prospect of lower rates may be helping.”
NAB economists said they forecast a softening of gross domestic product growth to 2.2 per cent in 2013 as well as a significant deterioration in the labour market.
“When combined with still-low inflation, we expect another Reserve Bank cut, probably in November, and more cuts may follow,” they said.
