THE Australian dollar was down almost one and a half US cents as traders sold off high-risk, high-yield currencies on renewed global concerns about the deepening Greek debt crisis.
At 5pm (AEST) today, the Australian dollar was trading at 105.35 US cents, down from 106.88 cents yesterday.
Since 7am (AEST) today, the local unit traded between 105.12 US cents and 105.90 cents.
Last night (AEST), Greek Prime Minister George Papandreou said he would seek to form a unity government to get support for new austerity measures needed to help secure another bailout for the debt-laden country.
The Australian dollar fell one US cent overnight and dropped another half a US cent during the local session today.
CMC Markets foreign exchange dealer Tim Waterer said the Australian dollar got caught up in the sell-off of the euro, which put downward pressure on the British pound and gold price.
"It's been a fairly disappointing day for most risk assets, he said.
"The Aussie did bounce off its session lows but, generally speaking, it was very much a case of traders moving into the more conservative currencies such as the Swiss franc and Japanese yen.
"Obviously there is ongoing concern about he potential size of the bailout for Greece and the longer that drags on the worse that will be for general market sentiment.''
Mr Waterer said that although the Greek crisis would be the main driver for currency markets in the coming week, there could be some good news from tonight's release in the US of the Philadelphia Federal Reserve June manufacturing survey.
"There is a chance this Philly Fed number could hold up reasonably well and we could see markets stabilise heading into the weekend, Mr Waterer said.
"On the flipside, if the number comes in lower than expected, it could accelerate some of the broad selling that we've seen,'' he said.
