The Australian dollar has tumbled almost one US cent to its lowest level in six weeks on fears of a euro zone recession and nervousness about Greece’s debt-swap deal.

At 0630 AEDT, the Australian dollar was trading at 105.30 US cents, down from 106.27 cents on Tuesday afternoon.

Since the start of the week, the currency has fallen more than two US cents.

FXCM senior currency strategist John Kicklighter said there had been a downturn in investor sentiment in recent days.

“It’s been quite the move,” he said.

“We’re seeing people turning to a bearish sentiment and they are really paying more attention to the negative and they are playing down the positive.”

The Australian dollar followed global stock markets lower on Tuesday night after it was revealed Europe’s economy contracted 0.3 per cent in the December quarter, raising fears of a mild recession.

On Wall, Street the Dow Jones opened 153.97 points lower (1.19 per cent while the S&P 500 fell 14.91 points (1.09 per cent).

European markets also suffered with Frankfurt’s DAX 30 closing 3.40 per cent lower while London’s benchmark FTSE 100 index dropped 1.86 per cent.

Investors are also nervous about Greece’s debt swap deal with private investors which is due to occur on Thursday.

The debt-stricken euro zone nation is trying to convince private sector investors to swap their existing government bonds for new ones with a lower face value and lower rate of interest.

If Greece is unable to persuade enough investors to take part it will not receive a 130 billion euros ($A161.67 billion) international bailout package and will be forced to default on its debt.

On a domestic level, currency traders will be watching the release of Australian gross domestic product figures (GDP) on Wednesday.