THE dollar was one US cent lower at noon as investors continued to offload high-risk assets on a bearish outlook on recovery in the global economy.
Atnoon (AEST), the dollar was trading at $US0.8200/04 down 1.36 per cent from yesterday's close of $US0.8314/16.
From7am(AEST)today, the local unit traded between $US0.8242 and $US0.8073, its lowest level since July 2009.
The local currency has depreciated 11.95 per cent against the US dollar since April 30.
Financial markets continue to slide as a lack of a unified plan to solve the European debt crisis increases investor anxiety over the prospects of global economic recovery.
Wall Street closed lower, with the broader Standard & Poor's 500 index down 3.9 per cent.
Australia's benchmark S&P/ASX200 index had fallen by 2.18 per cent by 12.25pm (AEST).
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"Fear and risk aversion are the dominant themes on markets at the moment," said Westpac currency strategist, Jonathan Cavenagh.
"There are concerns (that) the turmoil in Europe is going to derail the global economic recovery.
"Also, obviously market participants are unsure about the regulatory framework we are going to be working in, and that's weighing on sentiment."
Mr Cavenagh said the global economic outlook appeared less prosperous than a month ago, and this had affected currencies linked to the world growth story, such as the dollar.
"That has brought about a really sharp correction in our currency," he said.
"It (the Australian currency) is typically a bellwether about the global economic outlook, and that has done an abrupt u-turn in the past few weeks."
The Australian dollar/Japanese yen cross, a barometer of risk sentiment on financial markets, has declined 11.3 per cent in the past week.
For the rest of the local session, Mr Cavenagh forecast the dollar to trade between $US0.8090 and $US0.8280.
"It would not surprise me if we don't see further weakness coming through over the coming session, if we don't see a circuit breaker for all this risk aversion," he said.
Meanwhile, the bond market was firmer at noon.
At midday (AEST), the yield on the Commonwealth Government April 2020 bond was 5.350 per cent, down from yesterday's close of 5.403 per cent, while the May 2013 bond was at 4.703 per cent, down from 4.790 per cent.
On the Sydney Futures Exchange, the June 10-year bond futures contract was at 94.640, up from 94.600 on Thursday, while the June three-year bond futures contract was 95.240, up from 95.160.
Bills ignore ratings agenciesDollar lower at noon, bonds firmer
