The Australian dollar is trading higher this afternoon after the Reserve Bank left interest rates on hold. In recent trade, the dollar was trading at 84.1 US cents, up from 83.6 US cents before the decision was announced. At Monday’s close, the dollar was buying 84.58 US cents.

Earlier, Royal Bank of Scotland foreign exchange strategist Greg Gibbs said the Australian dollar was following the direction of weaker equity markets in Asia.'It is coming down with equity markets on further concerns developing over the global economy,'' Mr Gibbs said.

''Concerns over those economies (the US and Europe) and also recent evidence of a slowing in the Chinese economy, while commodity prices have been softer. ''I’m viewing it as a continuation of the trend we saw last week.'' The local currency received some support following stronger than expected trade data, but the lift was short-lived, Mr Gibbs said.

'It did for a short time but now it is drifting a little bit lower,'' he said. Australia’s trade surplus was $1.645 billion in May, seasonally adjusted, greater than the market median forecast for a surplus of $500 million. April’s trade surplus was revised higher to $1.123 billion from the original estimate of $134 million, an increase of $989 million.

Mr Gibbs said financial markets were awaiting the statement following the Reserve Bank of Australia’s (RBA) decision on interest rates. All 16 economists surveyed by AAP forecast the central bank to leave the cash interest rate at 4.5 per cent for a second straight month. 'The markets are a little bit biased towards expecting something dovish,'' he said. ''The risk is they could be disappointed and provide some support for the currency.''