Dollar down on fiscal cliff stalemate
Australia’s dollar maintained a three-day loss and the nation’s bonds rose amid concern US lawmakers are deadlocked on a deal to avert the so-called fiscal cliff, reducing demand for riskier assets.
Demand for the dollar was also damped after Australian Treasurer Wayne Swan said a budget surplus for the 2012-2013 year was unlikely.
“Another 24 hours goes by and we still don’t have any concrete development on the fiscal cliff with the end of the year not far away,” said Robert Rennie, chief currency strategist at Westpac Banking. “That’s one good argument for a lower Aussie.”
Australia’s currency was little changed at $US1.0477 after falling 0.8 per cent in the previous three days. The dollar dropped 0.5 per cent to 88.03 yen.
Australian government bonds climbed, with 10-year debt yields dropping three basis points to 3.36 per cent.
Officials in President Barack Obama’s administration told leaders of business and financial services groups that negotiations with House Speaker John Boehner over the fiscal cliff of tax increases and spending cuts have deteriorated, according to a person familiar with the matter.
Australia’s Swan said that tax receipts in the first few months of the fiscal year are “well below our forecasts.”
“What we’ve seen is a sledgehammer hit our revenues,” he said at a press briefing in Canberra.
The dollar fell against the yen after technical indicators signalled recent gains in the South Pacific currencies were poised to reverse. The Australian dollar’s 14- day relative strength indicator against the yen was at 70, the level that suggests an asset is about to change direction, while the equivalent gauge for New Zealand’s currency was at 71.