The Australian dollar has opened lower after renewed expectations of US interest rate rises helped revive an ailing US dollar.
At 0700 AEST, the Australian dollar was trading at $US0.9746/49, down from yesterday's close of 0.9772/75.
Overnight, the Australian dollar moved between a high of $US0.9796 and a low of 0.9728.
The US dollar was stronger overnight on expectations the US Federal Reserve will be forced to raise interest rates due to rising inflation concerns.
US Federal Reserve chairman Ben Bernanke's testimony before Congress that inflation risks had "intensified" was supported by the latest US consumer price index (CPI), which showed consumer prices rose at their fastest annual pace in 17 years.
The minutes from US central bank's June meeting also highlighted inflation, saying "members believed that the next change in the stance of policy could well be an increase in the funds rate; indeed one member thought that policy should be firmed at this meeting".
Bank of New Zealand currency strategist Danica Hampton said the minutes showed US policymakers were "still fretting about inflation", which helped lift US dollar sentiment.
"The main story was about the Fed and expectations that the next move from the Fed will be higher, albeit probably not anytime soon," Ms Hampton said from Wellington today.
A falling crude oil price, as well as a positive day on US equity markets thanks to an encouraging earnings report from major US bank Wells Fargo, also added to positive US dollar sentiment, Ms Hampton said.
The RBA releases its monthly bulletin at 1130 AEST, while the Australian Bureau of Statistics merchandise imports data for June.
"I don't think that we're going to test yesterday's high, given the stronger US dollar today," Ms Hampton said.
The Australian dollar reached a 25-year high of $US0.9849 during yesterday's offshore session, but moved lower after RBA governor Glenn Stevens hinted that official rates could be cut before inflation fells back to its target band of two to three per cent.
While the US dollar firmed against the Japanese yen and euro, it performed less strongly against the Australian dollar and New Zealand dollar last night.
Ms Hampton said the overnight moves were "not entirely rational", given the market interpreted Mr Stevens' comments as "a little bit on the dovish side".
