In late afternoon trade the Aussie was trading at US87.52¢: its lowest level since February 4. Global sharemarkets fell after Wall Street's S&P500 index on Thursday night posted its biggest one-day loss since July, with the "risk-off" sentiment pulling down commodities and currencies too.

Traders said there was no single catalyst for the global market moves, but rather a laundry list of possible triggers including reports Russia might freeze foreign assets in retaliation for sanctions, worries about growth in China, conflict in the Middle East and profit taking for the quarter end.

Both the Aussie and the New Zealand dollar came under pressure on Thursday when the Reserve Bank of New Zealand governor on Thursday released an unscheduled statement saying the Kiwi's strength is "unjustified and unsustainable".

Combined with the rise in volatility in the currency market and the strengthening US dollar, the RBNZ statement triggered a two-day fall in the Aussie, taking the week's losses to nearly 2 per cent.

The RBNZ statement, which highlighted slowing China's growth, signs of US growth, a decline in global risk appetite and falling commodity prices, struck a chord with traders of the Aussie dollar operating in a similar economic environment, National Australia Bank global co-head of forex strategy Ray Attrill said.

"With the decline in the iron ore price, [the statement] caught the imagination of the Aussie market and also the rise in volatility had a role," Mr Attrill said.

The statement also floated expectations of active intervention from the Kiwi central bank, in contrast to the local central bank, which in previous statements advocated a "period of stability in interest rates".

"I think RBNZ's announcement was Australia's game-changer because of the implied threat of active intervention policy," Mr Attrill said.

Earlier this month NAB forecast the Australian dollar to reach US88¢ at the year end. NAB is expected to release any revised forecast on Monday.

"If someone held a gun to my head I would say the range is going to be US85¢ to US90¢ for most of the remainder of the year," Mr Attrill said.

With Thursday's unexpected RBNZ move, the currency market will be closely watching the Kiwi central bank for further triggers.

Commonwealth Bank of Australia senior currency strategist Joseph Capurso said a good opportunity for any intervention policy announcement would be October 6, Australia's public holiday.

"If a central bank wants to intervene you do it on a day and a time when the market is illiquid," he said.

The New Zealand central bank could sell the Kiwi dollars and buy the US dollars and maybe even the Australian dollars, he said.

But with the Kiwi dollar currently trading at US79¢, 10 per cent down since mid-July, any intervention action from the Kiwi central bank was unlikely, Australia and New Zealand Banking Group senior forex strategist Sam Tuck said.

"The [RBNZ] achieved the holy grail of talking at the right time," Mr Tuck said.

NAB expects the next technical support level to be this year's low at US86.60¢.

But with the Kiwi dollar currently trading at US79¢, 10 per cent down since mid-July, any intervention action from the Kiwi central bank was unlikely, said ANZ Bank.

Photo: Bloomberg

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