The loonie ended down 0.25 of a cent to 101.20 cents US.
Observers have been closely watching the daily developments for any signs of progress, but negotiations have hit a setback.
The White House threatened to veto House Speaker John Boehner's backup plan to avoid automatic tax increases and government spending cuts that are set to take effect Jan. 1 if no deal is reached on cutting the government's budget deficit.
Boehner had proposed a "Plan B," separate from negotiations with the White House, that would extend decade-old tax cuts for everyone making less than $1 million a year.
Meanwhile, the U.S. Commerce Department said builders broke ground on fewer houses in November, likely in part due to superstorm Sandy in the Northeast.
The report said builders began construction of homes at a seasonally adjusted annual rate of 861,000. That was three per cent lower than October's annual rate of 888,000, although observers noted that the October figure was the highest since July 2008.
And the Teranet-National Bank index of Canadian housing prices fell in November compared with October's reading — only the fourth time in 13 years of data collection that there has been a decline between the two months.
The composite index covering 11 major urban centres stood at 154.02 last month, down 0.4 per cent from October. Ten of 11 local markets tracked showed declines.
In commodities, the February crude contract on the New York Mercantile Exchange rose $1.58 to US$89.98 a barrel. The January contract expired at the end of the session.
March copper declined 4.8 cents to US$3.61 a pound while February gold bullion moved back $3 to US$1,667.70 an ounce.