THE Australian dollar is lower, trading on thin volumes, as investors remain cautious about the US budget negotiations.At 7am on Thursday, the local unit was at 103.71 US cents, down from 104.09 cents on Christmas Eve on Monday.
BK Asset Management director Kathy Lien said with most traders off work the movement in US stocks was the main driver for the Australian dollar.
"As a result currencies are taking their cue from equities, so at the start of the North American session we had the Aussie dollar run up a bit as stocks opened up in positive territory in the US," Ms Lien said from New York.
"Then we had a sharp sell off in the New York session, as a result the Aussie dollar reversed."
Ms Lien said there was still nervousness in the markets ahead of the Chinese November industrial profits to be released on Thursday and US budget negotiations set to resume on Thursday.
The US president Barack Obama and Congress are in in talks to decide on a series of measures to avoid the so-called fiscal cliff - a series of tax hikes and spending cuts which will begin from January 1, which are expected to push the US back into recession.
"At this point it looks like there will only be a minimal deal," Ms Lien said.
"The lack of big price action in the market indicates investors are quite nervous."