The Australian dollar has moved lower on official data showing weak inflation at the farm and factory gate, which has added to the case for a rate cut by the central bank.
The producer price index (PPI) at the final stage of production fell 0.3 per cent in the March quarter for an annual rise of 1.4 per cent, the Australian Bureau of Statistics said on Monday.
Economists' forecasts had centred on a March quarter PPI rise of 0.5 per cent.
The PPI is a measure of inflation and can influence expectations for the more closely watched March quarter consumer price index (CPI) due on Tuesday.
A benign inflation figure is seen as the crucial factor in the Reserve Bank of Australia (RBA)'s rates decision on May 1.
CMC Markets foreign exchange dealer Tim Waterer said the weak PPI had caused the Australian dollar to drop, as traders became more confident in the case for a rate cut.
"Today's big story was that negative PPI numbers knocked some value out of the currency, with traders seeing it as a prediction for tomorrow's CPI data," he said.
"That CPI figure is going to hold the key for any movements by the RBA to decrease the cash rate."
However, the local currency rose slightly after Chinese manufacturing data came in stronger than expected.
China's official purchasing managers' index (PMI) reached 49.1 in April, up from 48.3 in March, but remained below the 50 mark which signifies expansion rather than contraction.
At 1700 AEST on Monday, the local unit was trading at 103.18 US cents, down from 103.38 cents on Friday.
Since 0700 AEST on Monday, the Australian dollar has traded between 103.18 US cents and 103.85 cents.
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