The Australian dollar has rebounded on the back of weaker-than-expected US economic data.

Early Thursday, the local currency was trading at 94.08 US cents, up from 93.62 cents on Wednesday.

Disappointing data released in the US overnight dragged the greenback lower, giving the Australian dollar a boost.

The US economy shrunk 2.9 per cent annual rate in the first quarter, the sharpest contraction in five years, official figures showed.

Analysts had expected a more modest 1.8 per cent decline.

Also, US orders for durable goods fell in May following three months of gains.

“There was a generally weaker tone in the US data overnight and the Australian dollar was one of the beneficiaries of that,” Bank of New Zealand strategist Kymberly Martin said.

But the direction of the Australian dollar could change with the release of key US inflation figures on Thursday night.

“The US PCE deflator is the Federal Reserve’s preferred inflation measure and the market consensus is looking for a bit of a pickup there and that could support the US dollar,” Martin said.

The impact of the figures was not extreme on the greenback, with most economists favouring a strong rebound this quarter and firm growth for the rest of the year.

“We believe this could be a lone rogue number and the US could make up for this growth dip throughout the rest of the year,” said Kathleen Brooks of Forex.com.

“We don’t think that the GDP revision changes anything for the Fed, but it may explain why the core Fed members … are sticking to their dovish guns in the face of better labour market data and a pick-up in inflation.”