The Australian dollar has opened the day lower after America's credit rating was downgraded by Standard and Poor's for the first time in history.
The domestic currency dropped on Friday night after Standard & Poor's reduced America's credit rating from a sterling AAA to AA+ due to the failure of bitterly divided US leaders to reach a consensus on containing the country's spiralling debt.
Westpac New Zealand senior market strategist Imre Speizer said risk sentiment was likely to fall further on the news.
"The downgrade most obviously pushes the US dollar lower but that doesn't necessarily mean that the Aussie goes higher because there's also a risk sentiment effect, which should rub off on global equity markets," he said.
Mr Speizer said the Australian dollar was set for a very volatile trading day, as global equity markets react to Friday's news.
"I think it's going to be one of those days where picking the direction of the day is pretty much futile.
"It's probably going to be one of the more volatile days we've seen for some years."
At 0700 AEST, the local unit was trading at 104.30 US cents, down from 104.42 cents on Friday.
He said traders were awaiting the European Central Bank (ECB) to announce a plan to buy Italian bonds in order to lift confidence in the Eurozone.
"That's a plus for the Aussie.
"I think as soon as you see that statement come out you'll see a small upward reaction in the Aussie."
Also today, Group of Seven (G7) officials are expected to give a teleconference to ease market fears sparked by the S&P downgrade.
This was expected to support the US dollar and drag on currencies such as the Australian dollar, Mr Speizer said.
Since 1700 AEST on Friday, the local unit has traded between 103.76 US cents and 105.28 US cents.