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$A lower as fiscal cliff nears

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SYDNEY, Dec 24 AAP

December 24 2012, 12:27AM

The Australian dollar has fallen as the prospect of an agreement to avert scheduled spending cuts and tax increases in the United States becomes less likely.

At 1200 AEDT on Monday, the local currency was trading at 103.91 US cents, down from 104.53 cents on Friday afternoon.

Since 0700 AEDT, it has traded between 103.85 US cents and 104.10 cents.

Easy Forex currency dealer Tony Darvall said trading volumes were light ahead of Christmas Day, but the dollar had continued to weaken.

"We've fallen quite a bit, but it is quiet because it's Christmas Eve," he said.

"We could see more selling though if the market gets any more negative news, or it looks like politicians aren't going to make any progress on the fiscal cliff.

"They only have a few more days until the end of the year."

On Friday, US politicians failed to reach an agreement on a plan to increase taxes for those earning more than $US1 million.

Talks are continuing to come up with measures to avoid the so-called fiscal cliff - a series of tax hikes and spending cuts which will begin from January 1.

Meanwhile, Australian ten-year bond futures prices were unchanged at noon.

At 1200 AEDT on Monday, the March 10-year bond futures contract was at 96.695 (implying a yield of 3.005 per cent), the same position as at Friday's close.

The March three-year bond futures contract was trading at 97.270 (2.730 per cent), down slightly from 97.280 (2.720 per cent) on Friday.