The Australian dollar is trading lower today, as commodity prices continue to fall, which some analysts predict, will be a drag on the Australian economy.

At 5.31pm (GMT) the Aussie dollar was trading at US71.89c down US72.12c in yesterday’s trade.

Iron ore, Australia’s biggest export fell below the US$40 mark for the first time in 10 years after reaching a high of nearly US$200 in 2011.

The dramatic decrease is going to give the Reserve Bank of Australia something to think about as it heads into its next policy gathering, and although nobody expects any rate cuts this time round, it will certainly be on the agenda at the following meeting.

China is the main culprit in this story as the country is the biggest buyer of iron ore and any slowdown is going to see demand drop off.

Also hurting the Aussie dollar was the latest Westpac consumer confidence index that came in at 0.8 percent lower than last month, although it remained above 100 showing there is more optimists than pessimists.

Speculation surrounding the governments proposed hike of the goods and services tax (GST) from 10 percent to 15 percent were blamed for the fall, as the cost of goods would increase.