The Australian dollar has opened lower on risk aversion generated by fears that the global credit crunch may not be over, after a large US insurer reported a record loss on Friday night.
At 0700 AEST, the Australian dollar was trading at $US0.9403/08, down from Friday's close of 0.9421/25.
Over the weekend, the local unit traded between $US0.9383 and 0.9435.
Bank of New Zealand currency strategist Danica Hampton said renewed risk aversion had weighed on the Australian dollar.
AIG, American International Group, the world's biggest insurer, posted its largest quarterly loss, $US7.8 billion ($A8.3 billion), reigniting worries about the global credit crisis, Ms Hampton said.
"Maybe more financial institutions will have further losses to reveal," she said.
"We saw that trigger a bout of carry trade activity."
Ms Hampton said traders hold sold riskier currencies, such as the Australian and New Zealand dollars, against the low-yielding yen.
"That really took a toll on the Aussie and saw it off its highs," she said.
The Australian dollar, at 0700 AEST, was trading at 96.89/94 Japanese yen, down from Friday's close of 97.35/42.
Despite falling on Friday night, Ms Hampton said the Australian dollar should creep a little higher during the local session today and test $US0.9450.
She said there was an "okay fundamental" story providing the Australian unit with some strength.
"If you ask yourself where you are going to put your money, Australia doesn't look a bad bet," she said.
Today the Australian Bureau of Statistics (ABS) releases housing finance data for March at 1130 AEST, with the market expecting another negative figure.
The Commonwealth Budget on Tuesday evening and the ABS wage cost index on Wednesday are seen as the local drivers for the domestic currency this week.
Wages will be looked at due to concerns about inflation, she said.
"The wage index will take a lot of focus given the RBA highlighted the risk of wage inflation," Ms Hampton said.
