Weak retail figures, combined with pessimism around Spain, have pulled the Australian dollar almost one US cent lower.

At 1700 AEST on Wednesday, the local currency was trading at 97.93 US cents, down from 98.75 cents on Tuesday.

Commonwealth Bank currency strategist Joseph Capurso said there was a sharp move downwards in the Australian dollar, after the release of official data showing that retail sales had fallen by 0.2 per cent in April.

“That retail figure was a fair bit weaker than expected, and that pushed it down,” he said.

“However, I think people got more concerned about those numbers than they needed to be – because it actually included some upward revisions.”

The local currency had been weakened earlier by news on Tuesday night that independent rating agency Egan-Jones had cut Spain’s sovereign debt rating to BB minus from B.

The Spanish government was also in the spotlight, as an Economy Ministry spokesman said that the government would fund Bankia’s recapitalisation after the financial institution asked for 19 billion euros ($A24.44 billion) in financial aid.

Mr Capurso said that construction data released on Wednesday could provide some support for the Australian dollar’s prospects on Thursday.

There was a rise of 5.5 per cent in construction work done during the March quarter, buoyed mainly by growth in (mining) engineering work.