Aussie dollar below 71 U.S. cents in Bank of Japan's wake

The Australian dollar has slipped in offshore trade after the Bank of Japan's interest rate cut into negative territory on Friday.

At the Asian open on Monday, the Australian dollar was trading at 70.82 U.S. cents, down from 71.25 U.S. cents at Friday's close, though the currency had been trading within a wide range.

The Aussie dollar had drifted sideways in much of the offshore trade as the fallout from the Bank of Japan's interest rate cut, which upped the chances of further easing by the European Central bank (ECB) and reduced the chances of further hikes by the U.S. Federal Reserve, Commonwealth Bank of Australia chief currency strategist Richard Grace said.

Moves in the Aussie dollar are now likely to be locally influences with the first policy meeting of Australias central bank after the summer break on Tuesday, while the quarterly Monetary Policy Statement is released on Friday.

"These local factors are likely to provide the Australian dollar with some positive support, as the relatively good performance of the local economy is highlighted," Grace said.

However offshore factors such as global equity movement and commodity prices are still weighing on the local unit, with the latest indication of the economic health of Australia's closest trade partner, China's purchasing managers index (PMI) to be released during the local session on Monday.

"Despite the perception the six-year slowing in China's economy is now becoming more rapid, generated by Chinese stock market falls and Peoples Bank of China intervention operations, we have yet to see real evidence of this in China's hard economic data," Grace said. Endit