The Australian dollar is back on a downward spiral, reversing solid gains made overnight, as markets continue to react to recent statements from US Federal Reserve Chairman Ben Bernanke.
The currency rose as high 97.50 US cents early on Friday, up sharply from 96.23 US cents on Thursday afternoon.
But by 1200 AEST the Australian dollar had retreated back to 96.65 US cents.
ForexCT head of research Steven Dooley said currency markets had been extremely volatile in the wake of Dr Bernanke's testimony to Congress on Thursday morning (Australian time).
"There's just been so much volatility," he said.
"I think the market hasn't been able to get its head around what Bernanke was trying to say."
Currency converter $AUD = $US
In his testimony Dr Bernanke warned of the dangers of stopping the Fed's key stimulus program too soon, but later indicated the central bank could start to wind it back in the next few months.
Mr Dooley said the Australian dollar, which has lost around seven US cents since the start of May, could continue to fall over the next week.
"Our view is that we could go as low as 94 US cents," he said.
Meanwhile, Australian bond futures prices were lower at noon.
At 1200 AEST on Friday, the June 10-year bond futures contract was trading at 96.660 (implying a yield of 3.340 per cent), down from 96.705 (3.295 per cent) on Thursday.
The June three-year bond futures contract was at 97.380 (2.620 per cent), down from 97.410 (2.590 per cent).
How low can it go?
Investments banks continue to be negative on the Aussie, with Credit Suisse's global strategists telling clients the currency could fall to US85c in 12 months because "this time it's structural".
“While a rebound remains possible, we think there is clear evidence that the Aussie is undergoing a structural downshift,” Credit Suisse's Ric Deverell said.
HSBC says it's bullish about the greenback and has lowered its estimate for the Australian currency to 90 US cents from 95 US cents as an year-end prediction.
UBS has revised its year-end and mid-2014 forecasts to 95 US cents and 90 US cents respectively.