Overall, there is the potential for a significant corrective rebound in the Australian dollar even though rebounds will quickly attract fresh selling pressure. 

The Australian dollar remained under pressure during Friday as risk aversion spiked even further while credit and equity markets remained under intense pressure. There was some marginal relief late in the day, but the currency remained extremely fragile and there was renewed selling in local trading on Monday with lows around 0.6050 against the US dollar.

The Reserve Bank of Australia intervened in the markets to help support the local currency, in contrast to reserve-replenishment operations seen during most of the past two years, as there was a further savage unwinding of positions. Volatility will remain extremely high in the short term and the Australian dollar will also tend to be undermined by the sharp decline in commodity prices as global recession fears intensify.