The Australian dollar is trending lower today on the back of lower prices and weak CPI figures due out early tomorrow.

At 12.40pm (AEDT) the Aussie dollar was trading at US69.45c down from US69.54c in yesterday’s trade.

The price of oil tumbled around 5 percent overnight after the Iraqi government reported a record production for December while leaving the door open for a further increase in output this year.

The news added further woes to the situation expected in the nearest future when Iranian oil comes on line after the lifting of sanctions, which is expected to further pressure the oil price.  

Markets in Australia are closed today as the country celebrates a national holiday, but the party may be short lived with the release of local quarterly CPI figures tomorrow.

Analysts are expecting a number of 0.3 percent, which is well down on last quarter’s figure of 0.5 percent and will mark the third consecutive decline if predictions are right.

Although the Reserve Bank of Australia may be happy with the level of the Australian dollar at the moment at around US70c there is some concerns that the persistently low inflation figures may be playing on their minds.

In fact, if we look at the sentiment in the market, investors are now starting to place their bets on not if but when the RBA will cut Interest rates as the pressure builds up, with chances the move will come in the first half of the year as more disappointing data rolls in.