The Australian dollar is trading lower today after two of the worlds largest oil producers agreed to a cut in production in order to put a floor under the oil price.

At7.55am (GMT) the Aussie dollar was trading at US71.00c sharply lower than the high of US71.81c it reached in yesterday’s trade.

In major discussions overnight, Saudi Arabia and Russia agreed to cut oil production in order to boost the price and prop up their economies, which have been hit hard in the wake of the price slump.

Although it was a step in the right direction to shore up the oil price, countries such as Iran were not part of the talks and most believe they will keep flooding the market with oil, which may offset the deal between Saudi Arabia and Russia.

Commodity currencies like the Aussie dollar were dragged down by the uncertainty.

The market will now pay attention to the American session later today with the release of the FOMC minutes from the US Federal Reserve where the question of the next interest rate hike will be on the table.

There is also important data due out of Australia tomorrow including a speech by RBA assistant governor Malcolm Edey on the state of the economy as well as the latest unemployment rate, which is likely to choose the direction of the Australian dollar as we head into the weekend.