The Australian dollar lowered as falling oil prices and a downgrade to the International Monetary Fund’s (IMF) global growth forecasts weighed on market sentiment.

At 0700 AEDT on Wednesday, the local unit was trading at 81.75 US cents, down from 81.83 cents on Tuesday.

The IMF said weaker growth in China, Russia, the euro area and Japan will hold world economic growth to just 3.5 per cent this year, down from its previous forecast of 3.8 per cent.

The Australian dollar was already under pressure on Tuesday after it was reported that Chinese economic growth slumped to a 24 year low of 7.4 per cent in 2014.

Westpac senior market strategist, Imre Speizer, said the currency started to recover some of the losses made after the weak Chinese data but the IMF forecasts pushed it back lower.

“Sentiment soured slightly amid a global growth downgrade from the IMF and lower oil prices,” Speizer said.

“The shift in global sentiment overnight has given the Australian dollar a slightly negative hue on the day.”

Key economic data to be released on Wednesday includes the Westpac/Melbourne Institute Survey of Consumer Sentiment.

After that, all eyes will be focused on Thursday’s European Central Bank (ECB) Council meeting.

The ECB is expected to announce a new economic stimulus measure at the meeting.

AAP