COZforex: The Australian dollar ended Friday’s session close to a 3 weeks low against its US counterpart, as investors became less confident that a deal will be reached in time to tackle the approaching fiscal cliff crisis in the US, weighing on demand for risky assets.

AUD/USD hit 1.0393 on Friday, the pair’s lowest since December 3; the pair subsequently consolidated at 1.0399 by close of trade, down 1.56% for the week. COZforex senior currency strategist Ian • Quigley said, AUD/USD is predicted to find its first resistance at 1.0487, and a rose through could take it to the next resistance level of 1.0524. Meanwhile, the pair is predicted to find support at 1.0426, and a fell through could take it to the next support line of 1.0401.

Market sentiment remained under pressure as investors continued to monitor developments surrounding the fiscal cliff in the US, approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.
The US House has adjourned for the Christmas holiday, fueling speculation that policymakers will not be able to avert the fiscal cliff. Without a deal, the US could fall back into recession and drag much of the world down with it.

In commodities, LME Copper prices dropped 1.5% or $120.0/MT to $7825.3/MT. Also, Aluminium prices dropped 2.0% or $40.8/MT to $2031.8/MT.

The Aussie came under pressure on Thursday after Australia's Treasurer, Wayne Swan, said the government is unlikely to reach its previously announced goal of a budget surplus for the fiscal year ending June 30, 2013.

Swan cited lower commodities prices, which have adversely impacted government revenue, as one reason the surplus may not be realized. (COZ forex UK)

COZ forex AUD/USD Chart: