AAP, with a staff reporter
The Australian dollar has fallen to a new 11-month low, after US stocks lost ground on the back of another batch of weak economic data.
The Australian currency dropped to 97.97 US cents in the early hours of Friday morning, a level not seen since June 2012.
At 0630 AEST on Friday, it was trading at 98.05 US cents, down from 98.37 cents on Thursday.
US economic figures released early on Friday morning Australian time, showed a sharp jump in weekly jobless claims while the number of housing construction starts fell 16.5 per cent in April.
Easy Forex senior currency dealer Francisco Solar said the main reason for the Australian currency's weakness was a surge in demand for the US dollar, though falling commodity prices and last week's interest rate cut from the Reserve Bank of Australia were also weighing it down.
"It (the move lower) is just in keeping with the negativity surrounding the Aussie dollar at the moment, and the positivity surrounding the US dollar," he said.
"It seems to be all one-way momentum at the moment."
Although some of the Australian's downward momentum was attributed to a negative response to Australia's federal budget, analysts say the trend is more in response to growing optimism about the US economic recovery.
“I don't think the story in Australia has changed ... it's confidence in the US recovery that has been quite instrumental,” Macquarie bank currency strategist Brian Redican told The Australian Financial Review.
Growing optimism about the outlook for the US economy could represent a positive development for much of the world engaged in actively devaluing their currencies to bolster export activity.
“It's a sign that the US might be declaring victory and withdrawing from the [global currency war] battlefield,” Mr Redican reportedly added.
An analysis by ANZ's head of global markets research Asia, Tim Riddell, suggests the Australian dollar could slide to about 96 US cents, though Commonwealth Bank of Australia has predicted the local currency could rebound to 1.0310 US cents in the coming months.