The Australian dollar is sharply down against its US counterpart as risk sentiment improves amid strong US economic data.

At 0635 AEST on Thursday, the Australian dollar was worth 78.98 US cents, down from 79.66 US cents on Wednesday.

Westpac’s Imre Speizer said US gross domestic product rose three per cent, on an annualised basis in the second quarter, beating market expectations of a 2.7 per cent lift.

Within the data: personal spending added 2.3 percentage points to growth, better than the expected 1.9ppts, while business investment was revised up from 0.64ppts to 0.85ppts.

Meanwhile, ADP private sector employment rose 237,000 in August, against the expected 185,000, posing upside risks to tomorrow’s broader non-farm payrolls report, Speizer said.

“The US dollar index is up 0.7 per cent on the day, having risen even before the strong ADP and GDP data,” Speizer said in a Thursday morning note.

“The AUD fell from 0.7996 to 0.7890.”

The main risk event for the local currency would be Australia’s second quarter capital expenditure, which the market expects to rise 0.2 per cent

July’s private credit data, and Reserve Bank of Australia deputy head of Financial Markets Infrastructure Sarah Harris’ panel participation at the Risk Australia conference were also on the horizon.

Speizer said he expected the Aussie dollar is to fall further on Thursday.

The local currency is also lower against the yen and the euro.

AAP

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