Australian dollar heading back to earth, but dramatic correction not expected

The Australian dollar has dropped to its lowest level against the US currency this year as investors return their money to safe-haven currencies amid fears that Greece will exit the eurozone.

Here's my analysis from this morning's edition of AM, and I took a closer look at the various factors on The World Today.


Source: Bloomberg

Financial markets and European banks are preparing for Greece to leave the 17-member currency bloc as its struggles to form a coalition government weigh on global equity and currency markets.

The Australian dollar is trading just above parity with the greenback, and at 9:50am (AEST) was worth 100.2 US cents.

It was last below parity in December, when the collapse of the eurozone appeared likely.

Although the dollar is weakening, Thomson Reuters senior currency analyst John Noonan says he does not expect it to fall below 98 US cents.