The Australian dollar has opened lower after a weak finish to US equity markets dragged the currency below $US0.6900 as investors shed riskier assets.
At 0700 AEDT, the Australian dollar was trading at $US0.6841/46, down from Thursday's close of $US0.6922/27.
During the overnight session, the local currency traded between a low of $US0.6804 and a high of $US0.7131.
The Australian dollar rose steadily through European trading, reaching its overnight high early Friday morning (AEDT) as the extreme risk aversion which hit markets Thursday lifted slightly.
But those gains were cancelled after the unit declined sharply in the 90 minutes before the start of the local trading day, when the Australian dollar fell almost two US cents to hit $US0.6804.
The move was in line with a dramatic finish on Wall Street, where the Dow Jones Industrial Average closed down 678.91 points, or 7.33 per cent, at 8,579.19 points, dropping below 9000 points for the first time since 2003.
The index has closed weaker for seven straight trading days.
LatitudeFX executive sales manager Steve Jardine said the Australian dollar was caught up in the big sell-off on US equity markets, continuing its "roller-coaster action" of recent days.
"It is all being driven by what's going on in equity markets," Mr Jardine said from Auckland.
"The Aussie and Kiwi both came off when that started to go."
The Australian dollar also fell against the Japanese yen.
At 0700 AEDT, the currency was trading at 68.44/52 yen, down from Thursday's local close of 69.51/58 yen.
Mr Jardine said such large movements in the Australian dollar could prompt the Reserve Bank of Australia (RBA) to act in a bid to stabilise the currency.
"You've got to be thinking that, as far as the Aussie goes anyway, the RBA might be concerned at some of the volatility that has been there in the Aussie and that they might be forced to step in at some stage," he said.
With no local economic data due Friday, Mr Jardine said the currency would take direction from how stock markets fared in Asia.
"If the negative sentiment prevails and they (are all) sold off in tandem, then you will still see the currencies under pressure," Mr Jardine said.
