The Australian dollar opened weaker today after paring down its overnight gains from yesterday’s move by the Reserve Bank of Australia’s to hold the cash rates at 4.75 per cent.

CommSec Chief Economist Craig James noted that the Australian dollar registered increase during the European session and eased off during the US session.

After tracking along side sharemarkets overnight, James sees that the major trigger for the Australian dollar was US President Barack Obama’s announcement of the two-year extension of the Bush era tax breaks that would bring down payroll taxes for a year and give better treatment to business investments.

Already, Obama’s tax package deal with the Republicans is already drawing criticisms from the Democratic party claiming, among others, that it works in favour of the American elite families.

At 0530 GMT, the Australian dollar increased to US$0.9911 from late Monday’s US$0.9878, but lower than an earlier higher figure of US$0.9917. The local dollar traded lower against the Japanese yen at Y81.73 from Y81.975.