The Australian dollar is lower as caution ahead of the release of key US economic data outweighed any optimism about the Reserve Bank of Australia's forecasts for higher economic growth and inflation.
At 1700 AEDT on Friday, the local unit was trading at 89.44 US cents, down from 89.60 cents on Thursday.
During the local session, it traded between 89.22 US cents and 89.74 cents.
The RBA said the inflation rate is likely to peak between 2.25 per cent and 3.25 per cent between now and June 2015 and raised its economic growth forecasts by a quarter of a percentage point.
The bank aims to keep inflation between two to three per cent over the course of the economic cycle and, if it persistently stays above that level, the RBA would need to raise the cash rate.
Easy Forex currency dealer Tony Darvall said the increased possibility of no more cash rate cuts initially gave the Australian dollar a boost, but then it lost ground on profit taking and a bit of caution ahead of the release of US jobs figures for January.
Non-farm payrolls figures are due out early on Saturday morning, Australian time, and the market is expecting an employment gain of 180,000 and an unemployment rate of 6.7 per cent in January.
"It's a little dangerous to be so close to 90 US cents and if the jobs numbers came out strong in the US then the US dollar would rise," he said.
"Having said that, the general feel is that the RBA's move to neutral is going to support the Aussie dollar."
Mr Darvall said the Australian dollar is likely to find buyers when it drops closer to 89.00 US cents.
He expects the the currency can rise above 90 US cents in the coming weeks.