By RACHEL PANNETT SYDNEY--The Australian dollar was slightly weaker late Friday, well below its highs for the day, after a report by the nation's treasury caused traders to hone in on the possibility of interest rate cuts by the country's central bank. "If the high exchange rate is judged to be inconsistent with keeping the economy close to non-inflationary full employment, we could expect that monetary policy would be eased in response, putting downward pressure on the Australian dollar," the treasury said in a report. The Reserve Bank of Australia has already cut interest rates by 125 basis points since November in a bid to help sectors of the economy like manufacturing and tourism not seeing the benefits of a once-in-a-century mining boom that is in turn fueling the strength in the Australian dollar. The RBA has paused at its last two monthly policy-setting meetings to assess the impact of the rate cuts, which took the official cash rate to 3.50%. With inflation low, however, and consumer sentiment still subdued, some economists expect at least one more rate cut this year. At 0639 GMT, the Australian dollar was at US$1.0450 down from US$1.0475 late Thursday and at Y83.07 from Y83.01. That was well down on an intraday high of US$1.0528 touched before the treasury report. David Scutt, a treasury dealer at Arab Bank of Australia, pegs support at US$1.0450 and resistance at US$1.0540. Heading into the weekend, investors will get a "gauge on the mindset of the American consumer" later Friday, Mr. Scutt said, with the release of the University of Michigan consumer sentiment survey. Euro-zone and German producer prices will also be released. -Write to Rachel Pannett at rachel.pannett@wsj.com

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