By DAVID ROGERS SYDNEY--The Australian dollar continued to tumble Friday, hitting a fresh three-year low of US$0.8889 as the U.S. dollar remained firm, Australian economic growth forecasts were revised down and investors anticipated further interest rate cuts from the Reserve Bank of Australia. "With the RBA maintaining an easing bias it will most likely act on following its Board meeting on Tuesday, the Australian dollar will likely continue to lag," said Deutsche Bank DBK.XE -0.78% currency strategist Adam Boyton in a client note. Late Friday, the Australian dollar was changing hands around US$0.8904 versus US$0.8956 last Thursday, putting it on track a 3.9% weekly fall, its biggest in almost two years. Year to date, the unit was down 14%. Barring an unexpected recovery in coming months, it will be the worst year for the Aussie since 2000. Australia's government Friday warned of slower-than-expected economic growth, higher unemployment and shrinking tax revenues in the latest sign that the nation's mining boom is rapidly cooling. The world's 12th largest economy is now expected to expand by 2.5% in the current fiscal year through June 2014, below the 2.75% level the government had forecast as recently as May. Unemployment is expected to rise to 6.25% this fiscal year compared with the 5.75% originally forecast. It stood at 5.7% in June. Overall tax revenues will be 33 billion Australian dollars (US$29 billion) lower than expected over coming years, meaning the budget deficit for the current fiscal year will swell to A$30.1 billion compared with the A$18.0 billion that had been anticipated. Pressure on the currency has increased since central bank Governor Glenn Stevens said Tuesday inflation risks are benign and are no impediment to a cut in interest rates. Financial markets were subsequently pricing in nearly two more interest rate cuts over the next twelve months. At the same time, the Greenback has risen against most currencies this week, as U.S. economic data have come in stronger than expected. Overnight, the Institute for Supply Management said its U.S. manufacturing purchasing managers' index rose to a two-year high of 55.4 in July from 50.9 in June, better than economists' expectations for a reading of 52.0. U.S. initial jobless claims, a proxy for layoffs, fell by 19,000 to a seasonally adjusted 326,000 in the week ended July 27. That was the lowest number since early 2008 and better than expectations for 345,000 new claims. U.S. non-farm payrolls data were due for release later Friday, with the market expecting a 183,000 rise in jobs and a 7.5% jobless rate.

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