THE Australian dollar was lower late today but markets globally were on hold ahead of a speech tomorrow by US Federal Reserve chairman Ben Bernanke which is expected to set the direction for trading over coming weeks. Locally, the focus is on Reserve Bank of Australia governor Glenn Stevens who will testify to a government committee on economics tomorrow. Late in the day, the Australian dollar was at $US1.0439, down from US$1.0480 late yesterday. Against the Japanese yen, the Australian dollar was at Y80.42, up slightly from Y80.34. While Mr Bernanke isn't expected to announce further quantitative easing measures in his speech at the annual Jackson Hole conference, traders are nevertheless expecting he'll say the option remains a live one should the economy weaken further. Mr Bernanke will assure markets that "should economic conditions warrant, the Fed will do all it can to support the economic recovery", said David Scutt, a trader at Arab bank. If the Federal Reserve moves too quickly into more quantitative easing and it failed to revive the world's biggest economy, "it will effectively mean they are out of bullets" Mr Scutt added. Glenn Stevens' comments will also be crucial, traders said, but he is expected to provide little in the way of certainty on the outlook for interest rates. Economists expect they'll be no scraps of information for market traders who are betting interest rates will be cut aggressively over coming months, nor will there be much for those still arguing interest rates can rise as inflation threatens to bubble higher. Markets are priced for 125 basis points of cuts over the next year. The positioning largely reflects a lack of confidence in global growth. The RBA has yet to back away from its long-held tightening bias, albeit it is cautious at the moment.

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