$A lower as fiscal cliff looms

Reported by AAP
Monday, December 31, 2012

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The Australian dollar is slightly lower amid doubts there will be a successful outcome to the US budget negotiations.

At 0700 AEDT on Monday, the local unit was trading at 103.66 US cents, down from 103.74 cents on Friday.

The main driver for markets at the moment is news on talks by political leaders in Washington on how to scale back a series of tax tax hikes and spending cuts that start from January 1.

If they are unsuccessful the new measures could push the US back into recession, which has been called a "fiscal cliff.

BK Asset Management director Kathy Lien said US stocks fell over one per cent on Friday because of the lack of good news from the US budget negotiations.

"The only thing investors will care about is how the US fiscal cliff talks are going," she said from New York.

"Currencies and equities will hold steady unless there is reason to believe that a deal will not be done by the end of the year or early next year.

"If no deal is made by December 31st but Congress pledges to make an announcement in the first two weeks of January, currencies and equities could drop only slightly in disappointment because investors will be willing to grant a short grace period."

24/07/2014 05:56Sydney, Australia. 24 July,2014
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