The Australian dollar has fallen to an almost three week low after the release of weak local building approvals figures and Chinese manufacturing data.

At 0700 AEDT on Tuesday, the local unit was trading at 86.83 US cents, down from 87.38 cents on Monday.

On Tuesday morning, it fell as low as 86.78 US cent, its weakest level since October 16.

On Monday, official data showed an 11 per cent fall in the number of homes approved for construction in September, much worse than the one per cent fall economists had expected.

Those figures came after the weekend release of China’s official purchasing managers index (PMI), which showed that manufacturing activity had expanded at a much slower pace in October.

Bank of New Zealand currency strategist, Raiko Shareef, said the Australian dollar and the Japanese yen had been the weakest major currencies so far this week.

“A soft official PMI reading from China over the weekend and a moderating trend in Australian building approvals colluded to push the Australian dollar down a hefty 1.2 per cent,” he said.

“The Australian dollar did not take too kindly to the headline miss in the building approvals numbers, despite the fact that this series is notoriously volatile.”

The yen has come under heavy selling pressure after the Bank of Japan, in a surprise announcement on Friday, said it would increase its massive bond buying program to kick start its sluggish economy.

Early on Tuesday morning, the Australian dollar peaked at 99.40 yen, its highest level against that currency since May 2013.

Local data out on Tuesday includes the release of retail spending and international trade figures for September.

The board of the Reserve Bank of Australia meeting today and is widely expected to keep the cash rate unchanged at a record low of 2.5 per cent.

AAP