THE Australian dollar is higher as sentiment about the US budget negotiations continues to be the main driver for financial markets.
US President Barack Obama cut short his Christmas holidays in Hawaii to return to Washington for talks with US Congressional leaders on avoiding the so-called fiscal cliff--a series of tax hikes and spending cuts due to start in early 2013.
If they are unsuccessful in finding a solution,the measures are expected to push the US back into recession.
Bank of New Zealand currency strategist Mike Jones said it had been a bumpy ride for the Australian currency.
"It's finished the night slightly higher,but that masks a bit of rollercoaster 24 hours for the Aussie dollar,"he said from Wellington.
"Sentiment towards the fiscal cliff is causing a lot of volatility in financial markets and the Aussie dollar at present and I guess we've seen sentiment flick from optimism to pessimism in a very rapid short space of time.
"Overnight there were hopes that US politicians could scramble together a deal to avert the cliff,but that seems to have faded as we've progressed through the evening.''
Mr Jones said the US budget negotiations would continue to be the main driver for markets for the remainder of the year.
"Probably the risk is that the Aussie dollar will continue to grind lower as risk appetite is scuttled by the US heading towards the cliff,"he said.
Mr Jones said he expected the Australian dollar to trade in a range between$US1.0350 and$US1.0380 during the local session today.