The Australian dollar is still lower after the release of the US Federal Reserve minutes and could fall further if Chinese manufacturing figures are weaker than expected.
At 1200 AEDT on Thursday, the local unit was at 90.08 US cents, down from 90.19 cents on Wednesday.
During the morning the currency traded in a tight range between 89.92 US cents and 90.12 cents.
Early on Thursday morning, the Federal Reserve released the minutes of its January policy meeting which showed the bank is determined to continue reducing its bond purchase program if the US economy keeps improving.
The US dollar rallied against most of the major currencies after the minutes were releaseD, including the Australian dollar.
ThinkForex senior markets analyst Matt Simpson said the market is now waiting for the release of the HSBC January purchasing managers' (PMI) index manufacturing data early on Thursday afternoon.
"Traders will be watching today's Chinese PMI release closely, with the Australian dollar set to drop if the forecasts of a weak result are correct," he said.
"The odds are favouring a soft number with forecasts of a 49.40 result indicating further contraction in Chinese manufacturing, a number above 50 signals expanding manufacturing."
Mr Simpson said a weak Chinese PMI would push down the Australian dollar enough for it to stay below 90 US cents.
He said a surprisingly good outcome could see the Aussie dollar break above 90.80 US cents.
Meanwhile, the Australian bond market is weaker.
At 1200 AEDT on Thursday, the March 2014 10-year bond futures contract was trading at 95.870 (implying a yield of 4.130 per cent), down from 95.915 (4.085 per cent) on Wednesday.
The March 2014 three-year bond futures contract was at 97.960 (3.040 per cent), up/down from 97.000 (3.000 per cent).