The Australian dollar is trading below 105.5 US cents after market players reacted negatively to a soft domestic employment report.
At 1200 AEDT on Thursday, the local currency was at 105.45 US cents, little changed from Wednesday's close of 105.53 US cents.
The Australian dollar fell about 0.3 US cent after figures from the Australian Bureau of Statistics (ABS) showed the nation lost 5,500 jobs in December, with the unemployment rate climbing to 5.4 per cent, from 5.3 per cent in November.
The result was below market consensus of total employment rising by 4,500.
The currency dropped to its intraday low of 105.36 US cents after the data was released at 1130 AEDT, from 105.64 US cents shortly beforehand.
However, the Australian dollar pared back some of that decline heading into noon.
OzForex corporate dealer Michael Judge said the soft employment report came on top of some sluggish housing and building data published in recent days, all of which raised the chances of an interest rate cut in February.
"This data will just further those calls for a rate cut," Mr Judge said.
The Reserve Bank of Australia (RBA) has delivered 175 basis points of interest rate cuts since November 2011, sending the cash rate to three per cent and levels not seen since the global financial crisis.
The RBA's next meeting is on Tuesday, February 5.
Mr Judge said he expected the central bank to lower the cash rate by 25 basis points in either February or March.
Meanwhile, the Australian bond market was flat at noon.
At 1200 AEDT on Thursday, the March 10-year bond futures contract was trading at 96.680 (implying a yield of 3.32 per cent), up from Wednesday's close of 96.665 (3.335 per cent).
The March three-year bond futures contract was at 97.260 (implying a yield of 2.74 per cent), up from 97.240 (2.760 per cent) previously.