THE dollar opened lower on today as risk aversion returned after BP agreed to place $US20 billion ($23.09 billion) into an oil spill victims fund.
At 7am AEST, the dollar was trading at $US0.8638/45, down slightly from yesterday's close of US$0.8647/49.
From5pm AEST yesterday, the local currency traded between $US0.8575 and $US0.8650.
US stocks ended a choppy day little changed after BP agreed to put $US20 billion into a fund for victims of the Gulf oil spill.
Canadian Forex corporate dealer Darren Richardson said the local unit traded in an extremely tight range during a relatively uneventful overnight session.
"We saw equities react to BP, with the statement saying BP was not going to be able to provide any dividends for the next three quarters," Mr Richardson said.
"That saw the equity market take a dive and that saw risk aversion put into place momentarily, and the Aussie dollar took a fall on the back of that negative data.
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"Apart from that, we had a very quiet day," he said.
"People were on the sidelines waiting for information about the general economic conditions in Europe and for more information about BP."
Adding to the negative sentiment overnight, US home construction plunged last month and building permits also fell, the latest signs that the construction industry won't fuel the US economic recovery.
Builders are scaling back now that government incentives have expired. The biggest evidence of that trend: single-family homes tumbled 17 per cent, the largest monthly drop since January 1991.
Mr Richardson forecast the local unit would trade in a tight range during the domestic session, with few significant data to be released.
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