The Australian dollar declined as investors awaited progress from US lawmakers on an agreement to raise the country’s debt ceiling - and avoid default - by August 2.
At the local close, the Australian dollar was trading at 108.13 US cents, down from 108.34 US cents on Friday.
The White House and top lawmakers struggled on Sunday for a deal to save the US from a default on its debt, amid fears of a panicked reaction from investors around the globe.
‘‘After last week’s European agreement, the market has been looking for the US to reach some sort of agreement on lifting the debt ceiling,’’ ANZ Banking Group senior rates strategist Tony Morriss said. ‘‘There is a heightened sense of uncertainty, which has seen greater demand for risk-free assets.’’
IG Markets dealer Chris Weston said while the US debt situation would remain the dominant economic event and was most likely to impact currency movements, the second quarter consumer price index (CPI) due on Wednesday would be significant.
Australia’s producer price index (PPI) released on Monday rose 0.8 per cent in the June quarter and was broadly in line with expectations and did not move the dollar.
The PPI is a key measure of inflation and can influence expectations for the more important consumer price index (CPI).
The RBA’s trade weighted index was at 77.7, down from 77.8 on Friday.
