The Australian dollar is lower on Friday morning, falling below parity with the US dollar for the first time since October 12.

The local unit followed European and US equities, which fell as borrowing costs for already debt-laden European governments continue to rise.

At 0700 AEDT on Friday, the Australian dollar was trading at 99.85 US cents, down from 101.04 cents on Thursday.

Since 1700 AEDT on Thursday, the local unit has traded between 99.70 US cents and 100.99 cents.

GFT Forex director of currency research Kathy Lien said there had been an exodus out of high-risk, high-yield currencies, like the Australian dollar in the past week.

“This weakness in the Aussie has all to do with the continued tensions in the eurozone,” Ms Lien said from New York.

“That’s based on concerns of the affect that Europe’s trouble will have on the world in general and the prospect of slower growth, not just in Europe or the US, but also in Australia as well.

“So, even though the outlook for Australia is better than any other country, the currency is suffering from global risk aversion.”

Ms Lien said there were rising concerns that eurozone government debt woes would spread beyond Greece, Ireland and Portugal.

“The main catalyst is that Italy could be forced to knock on the doors of France and Germany, and be the next country to ask for aid,” she said. “There’s also a risk of the ratings agencies downgrading France and Italy.”

Ms Lien said eurozone worries would continue to dominate market sentiment.

“Everything else will just be a sideshow to Europe and there’s a possibility the Aussie dollar could pass 98 (US) cents in the near future,” she said.

Ms Lien said she expected the Australian dollar to trade in a range between 98.75 US cents and 100.25 cents on Friday.