The Australian dollar is expected to continue on a downward spiral after the US Federal Reserve signalled it would wind back its economic stimulus program. The local currency fell 3.5 per cent against the US dollar this week, the biggest weekly fall since September 2011.
Late on Friday, the local unit was trading at US92.34¢, down from US95.45¢ at the start of the week.
ForexCT head of research Steven Dooley said this week's dive against the surging US dollar was a sign of things to come for the year ahead.
"The Aussie dollar's days of being over parity are done and dusted," Mr Dooley said.
"The major idea to take away from the last week has been that US Fed chairman Ben Bernanke got up on stage and outlined his plan for the next 12 months, and the Aussie dollar fell immediately after that.
"This reaction has been just because he said, 'I'm thinking about doing this'; imagine how bad it's going to be when he actually does do it. We'll be in the 80s before we know it and in the next 12 months, we'll be heading closer and closer back to that US80¢ mark."
Mr Dooley said weak manufacturing data from China along with the statement from Dr Bernanke about the possible stimulus program wind-up had created "the perfect storm" for the drop.
Meanwhile, bond futures prices were lower as the falling dollar reduces the chances of interest rate cuts by the Reserve Bank. The September 10-year bond futures contract was trading at 96.225 (implying a yield of 3.775 per cent), down from 96.350 (3.650 per cent) on Thursday. The three-year contract was at 97.160 (2.840 per cent), down from 97.260 (2.740 per cent).
UBS interest rate strategist Andrew Lilley said bonds had followed US bonds lower after the Fed's statements on quantitative easing. He expects markets to remain quite volatile next week, due to the large amount of US economic data to be released.