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Forex - AUD/USD trades lower, more declines could be seen

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Investing.com - The Australian dollar drifted lower against its U.S. rival in Thursday's Asian session as traders took a step back from riskier currencies.

In Asian trading Thursday, AUD/USD slipped 0.18% to 1.0486 after hitting its highest levels in about two weeks yesterday. The pair was likely to find support at 1.0375, the session low and resistance at 1.0533, the high of December 19.

After news of a fiscal cliff deal broke during Wednesday's Asian session, the Aussie dollar was a leader among the riskier currencies as traders embraced higher-yielding assets. However, Washington, D.C. still has business to tend to in the near-term and that might keep a lid on the Aussie dollar's upside.

Congress must extend the debt ceiling, or the amount of debt which the U.S. can carry at any one time, in February. That is sure to be another market-moving political debate because ratings agencies have already hinted that another downgraded to the U.S. sovereign credit rating is possible if the debt ceiling is not extended.

Standard & Poor's stripped the U.S. of the prestigious AAA credit rating in 2011, causing a slide U.S. stocks. Uncertainty over the debt ceiling issue could stoke demand for safe haven assets such as gold, though it is worth noting Congress has raised the debt limit 10 times in the past 10 years.

Additionally, BT Financial Group's chief economist told an Australian media outlet today that the Australian dollar could be vulnerable to some downside as the economy there grapples with declining investment. Faltering mining investment is one reason why the government believes its goal of fiscal surplus in the current fiscal year will not be reached.

Traders will now turn their attention to the U.S. weekly jobless claims report due out later today and the December non-farm payroll report due to be delivered by the Labor Department on Friday.

Speaking of data points that could move the Australian dollar, the AIG Services Index is scheduled to be reported tomorrow.

Elsewhere, AUD/JPY fell 0.3% to 91.47 while EUR/AUD dropped 0.2% to 1.2530.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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