The Australian dollar slipped to a 19-month low and is expected to fall even further, amid signs the US economy is recovering faster than expected while growth here softens.
The dollar lost half a cent when it sank to US95.55¢ on Wednesday morning, and sank further at the start of European trade.
It traded at US95.57¢ late on Wednesday and was under pressure against other major currencies, trading at 97.22 yen and 74.25 euro cents.
The falls came as Pimco, the world's biggest bond manger, said Australia was joining other countries in facing a period of slower economic growth and lower investment returns.
The Australian dollar in May recorded the second-biggest fall among global currencies against the greenback at 7.61 per cent, behind the South African rand, another commodity currency.
The Reserve Bank's trade-weighted index - which measures the dollar against a broad basket of currencies - weakened from 80 on April 12 to 73.5 on Wednesday. This is one of the sharpest falls since the financial crisis.
"Once thought impregnable, the [Australian dollar] suddenly looks vulnerable as the market focuses in on the retreating resources sector, improving US economy and weakening sentiment in China," RBS senior currency strategist Greg Gibbs said. "Now the dam wall has been broken, there is a lot of built-up tension still to be released."
Richard Yetsenga, ANZ's head of global markets research, said US96¢ had been a key support level for the Australian dollar. "It just went through some stops and through 96," he said. "The underlying trend in the Australian dollar is down as capital reallocates away from Asia and the commodity currencies."
Data released on Wednesday shows the volume of construction work done fell a seasonally adjusted 2 per cent in the March quarter, disappointing economists who expected a 1 per cent rise.
Economists said the latest figures could be a drag on Australia's gross domestic product growth, ahead of the release of first-quarter GDP figures next Wednesday.
In contrast, the S&P/Case-Shiller index of US house prices reported its highest gain in seven years, while US consumer confidence soared to the highest level since 2008.
"Ten-year yields in the US, following on from the very good run of economic data, were reaching highs of 2.17 [per cent on Tuesday night]," Westpac chief currency strategist Robert Rennie said, adding that the Australian dollar was falling faster than expected on the back of the improving US figures. "That is a support for the US dollar. It's a stronger dollar story that is driving the weaker Australian dollar."
Also weighing on the Australian dollar are the capital expenditure intentions report for the March quarter, which will be released on Thursday, and the Reserve Bank's board meeting on Tuesday.
Financial markets are pricing in a 28 per cent chance of a 25-basis-points cut, and are tipping at least one more cut by the end of the year.
The US and Australian economic data came as Pimco flagged further interest rate cuts as the mining slowdown hits.
Pimco analysts Adam Bowe and Robert Mead said in a report on Wednesday that Australia was joining other countries in a "New Normal", a term coined by Pimco to describe slower economic growth and lower returns after the global crisis.