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$A drifts lower on quiet day

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AAP

2012-11-13

The Australian dollar has followed major currencies lower in a quiet day of trading.

At 1700 AEDT on Tuesday, the currency was trading at 104.07 US cents, down from 104.17 cents on Monday.

Easy Forex senior currency dealer Francisco Solar said it had been a quiet day of trading with few major pieces of economic news.

However, he said the Australian dollar was dragged down by falls in other major currencies against the US dollar.

"Markets have been a little bit off it today, major currencies like the euro and the sterling have been trading lower and that has dragged the Aussie down a little," he said.

He said the release of Australian quarterly wage price data would probably be the main driver of the currency on Wednesday.

Economists expect the Australian Bureau of Statistics data to show a 0.8 per cent rise in wages in the September quarter.

But he said the currency could fall below 104 US cents overnight if the euro continued to weaken against the US dollar.

The euro has dropped around two US cents since last Wednesday.

"You'd be hard pressed to see it hold on to 104 if the euro keeps moving lower."

At 1700 AEDT, the Australian dollar was at 82.49 Japanese yen, down from 82.79 yen, and at 82.07 euro cents, up from 81.83 euro cents.

Meanwhile, Australian bond futures prices moved higher on Tuesday.

Commonwealth Bank interest rate strategist Phillip Brown said there had been a rise in demand for safe haven assets such as Australian bond futures in the wake of the US presidential election.

"Basically after the euphoria of the election people have had a look around and realised that not much has changed over there. Greece is still a mess and Spain is still not asking for a bailout," he said.

A major concern on markets is the so called `fiscal cliff' of tax increases and spending cuts due to come into effect in the US in early 2013.

If re-elected President Barack Obama and the Republican controlled House of Representatives cannot find an alternative solution to bring down the country's debt it is feared the US will fall back into recession.

At 1630 AEDT on Tuesday, the December three-year bond futures contract was at 97.490 (implying a yield of 2.510 per cent), up from 97.460 (2.540 per cent) on Monday.

The December 10-year bond futures contract was trading at 97.025 (2.975 per cent), up from 97.005 (2.995 per cent).

Evan Schwarten