The Australian currency retreated on Thursday after disappointing domestic building approvals data gave investors an excuse to sell into some of its recent hefty gains.

At the local close, the dollar was buying at 96.82 US cents, down 0.21 cents from Wednesday's finish of 97.03 cents.

The Aussie hit its strongest value since July 2008, when it reached 97.31 US cents overnight on Wednesday.

It declined today after data showed building approvals slid 4.7 percent in August due to a plunge in approvals for public homes, weaker than expectations for a flat outcome.

The disappointing data prompted speculation that the central bank would be less likely to lift the cash rate when its board meets on Tuesday.

The futures market is now pricing in a 50 per cent chance the Reserve Bank of Australia will lift the cash rate from its current 4.5 per cent to 4.75 per cent in October.

For the quarter, however, the local unit was up 15.2 percent, the most it has climbed in any quarter since June 2009, and ranking it the best performer among the world's most traded currencies in the three months.

"We've had a great run and the market still expects the momentum to carry it higher," said Grant Turley, an analyst at ANZ. "But positions are quite stretched and I think there's a whole lot of work to be done from here."


With Reuters