Heading down: The Australian dollar briefly dropped below 90 US cents overnight.

Heading down: The Australian dollar briefly dropped below 90 US cents overnight. Photo: Bloomberg

The Australian dollar has reached new multi-month lows against a range of currencies as investors continue to react to disappointing third-quarter growth figures, pushing back forecasts of the first RBA rate hike next year, and as expectations increase of a near-term US stimulus reduction.

The local currency fell to 89.99 US cents early this morning, a fresh three-month low, after shedding almost a cent after the GDP data for the three months to September pointed to sluggish economic growth. The Australian dollar has fallen as low as 88.48 US cents this year.

The Australian dollar also weakened against the British pound sterling and the euro, falling to their lowest levels since mid-2010. It was buying 55.22 pence and 66.58 euro cents in late trade.

The dollar slipped again after new figures released today showed Australia's trade deficit almost doubled in October. The currency fell a quarter of a cent to 90.14 US cents before bouncing back. It was buying 90.44 US cents in late trade.

The dollar could also reach parity with its New Zealand counterpart. It was trading around fresh five-year lows of NZ$1.10 during the day.

"The hate-fest continues for the Aussie," said Westpac senior currency strategist Sean Callow.

"And that's despite commodity prices. Iron ore's up 1.1 per cent to a high since 15th August. Gold jumped and copper's up 2.6 per cent. There are reasons to be optimistic about the Aussie, but it's yet to show through in price action at all."

The Australian dollar has been the weakest-performing currency against the greenback over the past month. It has declined by 5 per cent, while the Brazilian real has shed 4.22 per cent of its value and the Japanese yen has fallen by 3.8 per cent.

Commonwealth Bank currency strategist Joseph Capurso said the bearish attitude to the Australian dollar was a further reaction to the GDP numbers.

"But I think it was an overreaction and it will probably trend up a little higher," he said.

Mr Capurso said traders were reducing their expectations of a rate hike next year, according to the overnight indexed swap markets.

At the same time, a rise in US bond yields reflected increasing optimism about the US economy, with investors starting to pricing in the risk of a near-term taper - another factor that weighed on the Australian dollar.

Yields on 10-year US government bonds rose as high as 2.84 per cent during the day, their highest levels since mid-September.

Ten-year Australian government bond yields also rose to November 2011 levels, and were trading at 4.41 per cent in late trade.

"The Aussie is one of the favourite vehicles for US dollar bulls, and they did have reasons to be optimistic in last night's ADP payrolls report, and some forecasters revised up their expectations of official numbers [out on Friday]," Mr Callow said.

"The Aussie was a currency that benefited greatly from broad US dollar weakness over the past few years since the [financial crisis], so it stands to lose more than those on any broad dollar strength."

The ADP report said US companies had added 215,000 jobs in November, higher than the market had expected, while October's figures were revised upwards to 184,000. Economists are expecting that Friday's official payrolls data would show that 185,000 positions were added.

A higher-than-expected figure could see further downward pressure on the Australian dollar.

The Australian dollar has had six weeks of declines. It lost 3.68 per cent of its value in November, its biggest monthly decline since June.
 It lost 3.68 per cent of its value in November, its biggest monthly decline since June.

Reserve Bank jawboning about the need for a lower exchange rate to support the non-mining sectors of the economy, policy tightening in China and Asian emerging market concerns have also been weighing on the local currency.