Looking for His glorious appearing! Titus 2:13

Global consolidation efforts are driving the Australian dollar down.

The Australian dollar came under renewed selling pressure on Tuesday as the consolidation of global imbalances continues to fuel a rally in its US counterpart.

The Aussie dropped briefly to touch a four-year low around  $US86.5 cents on weak trade data and an upward revision in unemployment, before recovering to around $US86.9 cents as the market took heart from strong retail sales figures.

However, the main driver of more general weakness is a new surge in the US dollar, spurred by another bout of extreme monetary easing by the Bank of Japan.

The BoJ on Friday caught markets off-guard by announcing a larger-than-expected boost to it quantitative easing program, less than 48 hours after the US Federal Reserve confirmed a halt to its own six-year stimulus scheme.

Coming straight after the Japanese government formally doubled overseas asset allocation quotas for the country's biggest industry pension fund, the easing instantly got the reaction being sought: the yen dropped like a stone against the greenback and other reference currencies, and continues to fall.

By mid-morning on Tuesday the greenback was fetching Y113.88, up more than 4 per cent since the BoJ announcement, while the Australian dollar had gained more than 2 per cent, to Y98.88.

Tokyo is hoping that its latest monetary intervention will weaken the currency sufficiently to help kick-start an anaemic export economy while importing enough inflation to heat up domestic demand.

An instant rally in the Tokyo stock exchange, which on Tuesday looked sustainable, suggests investors share this optimism.

National Australia Bank's global co-head of foreign exchange strategy, Ray Attrill, said the move constituted a delicate balancing act.

"In the lead-up to last week's easing, there was a lot of Japanese business lobbies starting to express some disquiet at the dollar-yen exchange before it even got to Y110," he said.

"Small and medium-sized enterprises are basically suffering the consequences of a lower yen on higher input costs, and they not getting any of the benefit because they're not exporters."

This pressure, he said, was being weighed up by the government, which decided anyway that an even weaker yen would be good for the economy at large.

The decision was partly influenced by the sinking price of oil, a fuel which Japan has increasingly had to use in the wake of its nuclear power disaster in 2011.

At the other end of the equation is the US, whose surging currency has so far gone largely unremarked, although there are some policymakers who have warned of its potential to apply the brakes to the country's economic recovery.

US Federal Reserve Stanley Fischer last month set off a ripple of fresh volatility in global markets when he voiced concerns not only about parlous global growth trends, but the potential impact of the strengthening greenback on the US's still-vulnerable recuperation.

These concerns were also reflected in the minutes of the Fed's Open Market Committee September meeting, released just before Mr Fischer's comments.

In the event, the Fed cut its quantitative easing anyway, although the greenback's strength will remain on watch by economists and policymakers in the world's biggest economy.

In the near-term, however, they seem sanguine about another "currency war", during which troubled economies do everything possible to make themselves more competitive against the US.

"At the margin, the stronger dollar will have a dampening effect on inflation, which at this stage is a negative, but the impact on growth I think will be negligible," NAB's Ray Attrill said.

He said US growth looks set to continue because the latest data showed healthy factory activity.

"The strength of domestic demand is clearly more than making up for any slight dampening in external demand that would come from a strong exchange rate," he said.