The Australian dollar has fallen to a two-and-a-half-year low after the US central bank said it could soon start scaling back its economic stimulus and following weak Chinese manufacturing data.
At 1200 AEST, the local unit was trading at 92.62 US cents, down from 94.92 cents on Wednesday.
Early on Thursday morning, US Federal Reserve chairman Ben Bernanke said that if the American economy continued to pick up pace the central bank would scale back the $US85 billion-a-month bond-purchase program.
The Australian currency dived 1.5 US cents after the Dr Bernanke's press conference.
Westpac chief currency strategist Robert Rennie said most currencies fell against the surging US dollar in early morning trade.
Overseas and local stock markets also fell heavily on the prospect of the US central bank tapering off its stimulus.
"Unfortunately, financial markets remain in a state of extreme flux," Mr Rennie said.
"The Aussie dollar is lacking friends today.
"What Bernanke was at great pains to emphasise is that he envisages a path that the Fed starts tapering late in 2013 and finish by mid 2014. But it is data dependant.
"So, as we continue to have a run of better-than-expected data in the US, then that will continue to weigh on the Australian dollar."
Later in the morning, the Australian dollar fell to its intraday low after a HSBC survey showed that manufacturing activity in China fell for a second consecutive month.
"The Chinese PMI (Purchasing Manager's Index) was just released and that weighed significantly on the Australian dollar," Mr Rennie said.
He said the next focus for financial markets would be the Philadelphia Federal Reserve manufacturing index for June.
Meanwhile, the Australian bond market was weaker.
At 1200 on Thursday, the September 10-year bond futures contract was trading at 96.375 (implying a yield of 3.625%), down from 96.565 (3.435%) on Wednesday.
The September three-year bond futures contract was at 97.270 (2.730%), down from 97.430 (2.570%).