The Australian dollar is weaker as uncertainty over military action against Syria weighs on market confidence.

At 1200 AEST on Friday, the local unit was trading at 89.43 US cents, down from 89.58 cents on Thursday.

During morning trade it fell as low as 89.03 US cents, the currency’s lowest level since Wednesday.

The US is believed to be planning an attack on Syria in response to use of chemical weapons on its own citizens.

CMC Markets senior trader Tim Waterer said the currency was falling because investors were staying out of riskier assets.

“The ongoing situation regarding Syria is imposing a cap on the high yield, high risk currencies, such as the Australian dollar,” he said.

Th Australian dollar is also under pressure as better than expected US economic growth of 2.5 per cent in the second quarter of 2013 sparked more talk about the US central bank tapering its economic stimulus program in the coming months.

“The US gross domestic product figures really gave the US dollar a shot in the arm and they contributed to a fall in the Australian dollar,” Mr Waterer said.

But in the coming days, the Syrian situation will continue to overshadow any other drivers for currencies markets, such as economic data, he said.

“Until the market gets a bit more clarity over what action the US might take we might see the high risk assets drifting lower in the interim,” he said.

He expects the Australian dollar to trade in a range between 89.10 US cents and 89.60 cents on Friday afternoon.

Meanwhile, Australian bond futures prices were slightly higher at noon.

At 1200 AEST on Friday, the September 10-year bond futures contract was trading at 96.095 (implying a yield of 3.005 per cent), up from 96.090 (3.910 per cent) on Thursday.

The September three-year bond futures contract was at 97.240 (2.760 per cent), up from 97.220 (2.780 per cent).