The Australian dollar is trading sideways amid growing concerns about the looming US debt ceiling deadline.

At 0700 AEDT on Tuesday, the local unit was trading at 94.29 US cents, slightly up from 94.26 cents on Monday.
The partial shutdown of the US government, prompted by Congress’ failure to pass a budget, has entered its second week with no progress towards a resolution over the weekend.

Concern is also growing that the US government will not have enough money to pay its bills if an agreement to raise the debt ceiling is not reached by October 17, BK Asset Management managing director Boris Schlossberg said.

“With the clock ticking some investors are now becoming increasingly concerned that the stalemate may drag to the debt ceiling deadline and put the US in danger of default on its sovereign obligations,” Mr Schlossberg said.

“Although most market participants expect US lawmakers to come to some kind of a deal before the debt ceiling deadline, the current state of intransigence is clearly starting to make some investors nervous.

“The focus will remain on Washington DC as traders look for any clues to progress.”

AAP