THE dollar was down half a US cent at noon as weaker equities dragged the local currency lower.
At 12pm (AEDT), the Australian dollar was trading at $US0.8962/65, down 0.54 per cent from yesterday's close of $US0.9012/13.
Since 7am, the local unit has traded between $US0.8956 and $US0.8995.
Royal Bank of Scotland foreign exchange strategist, Greg Gibbs, said the local currency lost ground as sentiment to risk fell in Asian trade on Thursday.
Share markets in Asia ignored a positive lead from Wall Street.
Australia's benchmark S&P/ASX200 index was down 0.65 per cent by 12.19pm (AEDT), while Japan's Nikkei-225 index was 0.08 per cent lower.
The dollar has been considered a proxy for risk sentiment on financial markets for the past 18 months.
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"It has come off after a pretty stable offshore session," Mr Gibbs said.
"In our timezone, there has been some weakness, which basically reflects the broad strength in the US dollar which is developing.
"Ongoing risk factors such as sovereign risk continues to keep risk appetite from running on the topside.
Financial markets have been spooked during the past month about Greece defaulting on its sovereign debt and the implications of a scenario on the eurozone.
A speech on the current economic landscape from Reserve Bank assistant governor of economics Philip Lowe had minimal impact on the Australian dollar, Mr Gibbs said.
"It is virtually unmoved from that speech this morning," Mr Gibbs said.
"It provided a fairly upbeat assessment on the economy."
Mr Gibbs said market participants were awaiting the half-yearly appearance of RBA governor Glenn Stevens before a parliamentary hearing on Friday.
"They will be interested to know whether he has been influenced by recent unemployment figures, and what are his views on the developments around the world," he said.
For the rest of the Asian session, Mr Gibbs forecast the dollar to trade between $US0.8900 and $US0.9000.
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