The Australian dollar is weaker against the strengthening greenback, following promising US economic data.

At 0700 AEST on Wednesday, the local currency was trading at 93.02 US cents, down from 93.29 cents on Tuesday.

US home construction rebounded in July, rising to an eight month high and offering hope that housing has regained momentum after two months of declines.

Construction increased 15.7 per cent in July to a seasonally adjusted annual rate of 1.09 million homes, official figures showed.

The strong US figures combined with weaker data out of Europe and the UK to drive the greenback higher, said BK Asset Management MD Kathy Lien.

She said commodity currencies, including the Australian dollar, were weaker against the greenback.

“Investors bought US dollars aggressively today, sending the euro and British pound to fresh multi month lows,” Lien said.

“The outlook for the US economy leaves a lot to be desired but at the end of the day, dimmer prospects abroad are making the US dollar and US assets more attractive to foreign investors.”

A recent positive run of US housing market figures would leave the US Federal Reserve comfortable with their plan to end quantitative easing in October, Lien said.

She said the greenback could make further gains if minutes from the Fed’s last meeting, to be released this week, were more upbeat.

Lien said the Australian dollar would be in focus on Wednesday as Reserve Bank governor Glenn Stevens gives his semi annual testimony to parliament.

AAP