THE Australian dollar closed nearly US2c weaker on as investors booked recent gains on commodity-driven currencies.
At 5pm (AEST), the Australian dollar was trading at $US0.8049/51, down 2.38 per cent from Wednesday's close of $US0.8244/48.
During the local session, the unit moved between $US0.7984 and $US0.8056.
Royal Bank of Scotland FX strategist Greg Gibbs said the Australian dollar started the local session on the back foot following an increased bout of risk aversion during Wednesday's offshore trade.
The Australian currency started the local currency at $US0.8009/11 at 0700 AEST, down 2.86 per cent on Wednesday's close.
"There was a bit of a bounce back in the US dollar and weaker equity markets," Mr Gibbs said.
"There was also some profit taking on currencies like the Australian dollar.
"Currencies like the Aussie had run so high, that it had run out of buyers and it was probably vulnerable to a correction."
The Australian dollar had appreciated more than 30 per cent against the US currency in three months by the end of Wednesday's local session.
The Australian dollar regained some of its overnight losses during the local session after a speech from Reserve Bank of Australia (RBA) governor Glenn Stevens in Townsville, Mr Gibbs said.
"The comments from RBA governor Glenn Stevens in his speech today, where he provided a pretty upbeat assessment of China and longer term demand for commodities," Mr Gibbs said.
"He also hinted that if they are going to cut interest rates, they would not be in a rush to do so."
Mr Gibbs said Australia's first trade deficit for nine months had a minor effect on the currency.
The nation's balance of goods and services fell by $2.393 billion to record a $91 million deficit, the Australian Bureau of Statistics said.
It was below the financial market's forecast for a $1.4 billion surplus.
In April, exports slumped 11.3 per cent, the biggest monthly drop since July 1997.
"It did have some impact when it released because it was below the consensus forecast," Mr Gibbs said.
"There was a well known element that you would get a fall in coal and iron ore prices at same stage.
The central banks of England, Europe and Canada will announce their decisions on monetary policy following their meetings during the offshore session (AEST).
"There is really nothing anticipated from the meetings tonight," Mr Gibbs said.
There was also initial jobs claims for week ending in the US due for release ahead of non-farm payrolls for May scheduled for tomorrow's offshore session.
Mr Gibbs said the Australian dollar would trade between $US0.7880 and $US0.8260, with the risk at the lower end of the range during the offshore trade.
Meanwhile the Australian share market closed 2 per cent lower, weighed down by profit taking and a weaker resources sector on the back of softer oil and gold prices.
The benchmark S&P/ASX200 index was down 82.6 points, or 2.06 per cent, at 3,934.6, while the broader All Ordinaries index fell 76.8 points, or 1.92 per cent, to 3932.5 points.
On the Sydney Futures Exchange at 1617 AEST, the June share price index contract was 70 points lower at 3,953 on a volume of 29,376 contracts.
CommSec market analyst Juliette Saly said the materials sector was the most sold-off and there was also weakness in energy and financial stocks.
"We're seeing all the major sectors in the red today,'' Ms Saly said.
