But despite the risk averse mood amid lower local and regional equity markets, the dollar received a boost late this morning after the release of better than expected economic growth numbers.
At 12.00pm (AEST), the dollar was trading at $US0.8305/08, down from yesterday's close of $US0.8402/05.
During the morning, the local unit moved between $US0.8241 and $US0.8317.
The dollar reacted positively to figures which showed the domestic economy grew 0.6 per cent in the June quarter, which was above market forecasts of a 0.2 per cent expansion.
In the year to the June quarter, gross domestic product (GDP) rose 0.6 per cent, the Bureau of Statistics (ABS) said today.
The local currency was trading at $US0.8275 ahead of the figures being released at 11.30am, but rose to $US0.8308 shortly afterwards, extending the rally further to touch $US0.8317 just before noon.
OzForex manager of corporate business Jim Vrondas said the positive GDP report had supported the dollar.
"The GDP result of 0.6 per cent obviously shows how resilient our economy is and how well our economy is performing in these relatively difficult times,'' Mr Vrondas said.
"Most developed nations would just love to have a positive 0.6 per cent GDP figure.''
Despite the small lift higher, the dollar remained well below yesterday's closing level after heavy losses on Wall Street prompted a fresh round of safe-haven US dollar and Japanese yen buying during the overnight session.
Mr Vrondas said he expected the dollar to meet some resistance at $US0.8350 during afternoon trading.
"It remains to be seen how much follow through we will get above the $US0.8300 level,'' Mr Vrondas said.
"There is a bit of hesitation about whether this move lower in equities is actually the beginning of maybe a broader move.
"We probably have seen the top in the Aussie for now close to the 85 US cent mark and it is probably about time we tested the downside.''
The Reserve Bank of Australia's (RBA) trade weighted index (TWI) was at 65.7, down from yesterday's close of 66.4.
Meanwhile, the bond market was stronger. The yield on the Commonwealth Government March 2019 bond was at 5.348 per cent, little changed from yesterday's close of 5.346 per cent, while the yield on the April 2012 bond was at 4.802 per cent, down from 4.830 per cent previously.
On the Sydney Futures Exchange, the September 10-year bond futures contract price was 94.665, little changed from yesterday's close of 94.670, while the September three-year bond futures contract was at 95.110, up from 95.080 previously.
Dollar flat in directionless tradeStocks tumble amid investors’ worries
