Australian dollar has dipped below US70c for the first time in more than six years

THE Aussie dollar has dipped below US70c for the first time in more than six years, after commodities dived and analysts warned of further heavy falls.

THE Australian dollar has dipped below US70c for the first time in more than six years, falling to US69.99c after commodities dived in reaction to weak manufacturing data out of China and analysts warned of further heavy falls.

The local unit closed at US71.08c at the end of local trade today.

Traders were seen shying away from growth-oriented currencies like the Australian dollar overnight amid a broad risk-off trade that was kickstarted by official data out of Beijing showing Chinese factory activity at its lowest ebb for three years.

The development helped dragged several major Asian and European markets down around 3 per cent, while snapping a stunning oil rally.

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Crude prices traded down around 8 per cent amid a sell-off in the commodities space that led aluminium to a new six-year trough.

The lurch lower came in the wake of a dire forecast from Deutsche Bank analysts.

Deutsche’s Australian chief economist Adam Boyton said Chinese worries and the impact on commodities could potentially push the local unit below US60c for the first time in 12 years.

“I wouldn’t discount the currency moving into the US50s,” Mr Boyton said.

“I’m not saying in the next 24 hours or anything like that but, as a big picture adjustment, that wouldn’t seem unreasonable to me.

“Particularly if you think you’re looking at a structural slowing in China, the commodity structure will remain under pressure for some time.”

Around 18 months ago Deutsche tipped a fall to US65c by mid-2016.