The Australian dollar has bounced off its three week lows as currency traders go bargain hunting.

At 1200 AEST on Thursday, the local unit was trading at 89.54 US cents, up from 89.14 cents on Wednesday.

On Wednesday night the currency fell as low as 88.93 US cents, its weakest level August 5.

The dollar has fallen due to concerns about the US government planning an attack on the Syrian government for using chemical weapons on its own civilians.

LTG GoldRock director Andrew Barnett said the currency had a relief rally after two days of falls.

“There’s been no missiles fired off yet, so there’s been a few bargain hunters around,” he said.

“As a trader, I have to weigh the probabilities of what is going to happen.

“Personally think there is going to be some sort of missile strike in the next 72 hours, only because the US and UK have convinced themselves it was a chemical strike by Syria and they want to send a strong message.

“I think any type of rally in the Aussie dollar is going to be short lived if they start firing missiles.”

Mr Barnett said he expects tensions over Syria will overshadow any economic data that will be released over the next few days.

That was the case when the Australian dollar failed to react to positive local business investment on Thursday morning.

Capital expenditure by businesses rose by four per cent in the June quarter, higher than the 0.8 per cent rise the market was expecting.

Australian bond futures prices were relatively unchanged at noon.

At 1200 AEST on Thursday, the September 10-year bond futures contract was trading at 96.095 (implying a yield of 3.905 per cent), level with the local close on Wednesday.

The September three-year bond futures contract was at 97.230 (2.770 per cent), down from 97.240 (2.760 per cent).