The Australian dollar is weaker due to a surprise contraction in Chinese manufacturing activity.
At 1700 AEDT on Thursday, the Australian dollar was trading at 88.03 US cents down from 88.59 cents on Wednesday.
The local currency dived from 88.47 US cents to an intraday low of 87.94 US cents in early afternoon trade after the HSBC purchasing managers' index showed Chinese manufacturing activity falling to a six month low in January.
Commonwealth Bank currency strategist Joseph Capurso says traders are concerned about a slowdown in the economy of Australia's biggest trading partner.
"That spooked a few participants," he said.
"That's why you've seen the Aussie dollar fall away in the London session; you'll probably see commodity prices fall away and that might add a bit more downward pressure on the Aussie."
The preliminary Chinese manufacturing reading of 49.6 points was weaker than market expectations and also below the key 50 level signifying an expansion.
The news took the Australian dollar back to where it was on Wednesday morning before surprisingly strong consumer price index (CPI) inflation data for the December quarter caused the currency to jump by two-thirds of a US cent.
"We're precisely where we started pre-CPI," Mr Capurso said.