$A higher on fiscal cliff optimism

The Australian dollar is higher on suggestions that the US fiscal cliff of recession-threatening tax hikes and spending cuts could be dealt with before Christmas.

At 0700 AEDT on Thursday, the currency was trading at 104.76 US cents, up from 104.48 US cents on Wednesday afternoon.

BK Asset management managing director Kathy Lien said the cliff - a series of tax rises and spending cuts due to automatically begin in early 2013 if lawmakers can't agree on a debt-reduction plan - was a continuing influence on the Australian currency.

"We're in a cycle where any pessimism on progress is going to lead to weakness in the Aussie, and any optimism will lead to strength," she said.

"That's exactly what we're seeing today.

"It seems that (US President Barack) Obama is pushing for some form of compromise, and we also had comments from (House speaker John) Boehner, urging a serious discussion on the budget."

Ms Lien said that comments from Obama, saying he hoped a deal could be cut by Christmas, had provided optimism.

"It's putting a date in everybody's mind, and getting people excited about the possibility that we could get some reprieve from the fiscal cliff," she said.

She added that the issue would continue to dominate Australian markets for the rest of the week, although domestic capital expenditure data due on Thursday would also be watched.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9276-0.0011-0.12%
    AUDUSD=X
    0.5527-0.0008-0.14%
    AUDGBP=X
    0.6713-0.0008-0.12%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg