The Australian dollar was trading close to two US cents lower on Thursday morning, after rumours of bad economic news out of France sparked a global sell-off.

At 0700 AEST on Thursday, the Australian dollar was trading at 101.79 US cents, down from 103.63 cents on Wednesday.

Since 1700 AEST on Wednesday, the Australian dollar has traded between 101.68 US cents and 103.82 US cents.

Bank of New Zealand currency strategist Mike Burrowes said the Australian dollar was weakened overnight following reports of bad news from France.

“It kicked off with concern around the French sovereign credit rating … with rumours swirling around that they could potentially be downgraded,” Mr Burrowes said.

“Then we moved on to the French banks, with rumours that Societe Generale was on the brink of bankruptcy and that (French president) Nicolas Sarkozy was in an emergency meeting.

“Both of those turned out to be false, but they still dented sentiment towards the end of the Euro (session) … and that saw the Aussie fall as well.”

US stocks plummeted on Wednesday, more than wiping out the gains of Tuesday’s rebound, with the Dow Jones Industrial Average dropping 4.63 per cent, while share markets in London, Paris and Frankfurt also fell heavily.

At 1130 AEST on Thursday, the Australian Bureau of Statistics (ABS) releases labour force figures for the month of July.

The data is expected to show that 10,000 jobs were added to the economy in the month, the median of an AAP survey of 13 economists shows.

The July unemployment rate is expected to stay at 4.9 per cent for the third consecutive month, with the participation rate also tipped to remain unchanged at 65.6 per cent.

Mr Burrowes said the figures could move the Australian dollar, if they print out of line with market expectations.

“But that would depend on what global sentiment is doing at the time, which is anybody’s guess.”

He said the local unit may trade between 101 US cents and 102.90 during the local session on Thursday.