Alan Kohler is one of Australia’s most experienced commentators and journalists. Alan is the founder of Eureka Report, Australia’s most successful investment newsletter, and Business Spectator, a 24-hour free business news and commentary website. He also hosts Inside Business, a half-hour Sunday programme on the ABC, is the finance presenter on the ABC News - and producer of the nightly graph (or two).
The Australian dollar hit a fresh 11-month low versus the United States dollar during overnight European hours trading, forcing the local currency back below parity.
At 0342 AEST Tuesday, the Australian dollar was trading at 99.43 US cents, having earlier in the session reached 99.41 US cents, a level not seen since June 14, 2012.
The local currency had touched an intra-day high after 1700 AEST Monday of $US1.0016 and dipped below parity with the US dollar during the Friday overnight for the first time in 11 months.
The latest decline was attributed to weaker-than-expected Chinese fixed-asset investment and industrial production data.
IG market analyst Chris Weston said the Federal budget could be the next bearish catalyst for the dollar.
"Of course the high United States dollar will take most of the criticism and perhaps that will change going forward because the AUD is looking vulnerable against a whole host of G10 currencies right now," he said.
"Namely the US dollar, British pound, euro and New Zealand dollar. Downside should be limited to 0.9860/70 though."
Analysts at Barclays PLC have said they expect the Australian dollar to fall as low as 93 US cents over the next 12 months, while others have gone so far as to predict a fall to 80 US cents.
Currency-hedge fund FX Concepts LLC founder John Taylor told Bloomberg Television's "Market Makers" that the Australian dollar remains significantly overvalued.
The Australian dollar "is in a bubble -- it's in every bubble you can find," Mr Taylor told Bloomberg.
"It's all because they built up their commodity sector tremendously. The currency went way up, the rest of the economy is ferociously uncompetitive."