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Yen, Dollar Weaken as U.S. Budget Deal Damps Demand for Safety - Bloomberg

The yen and dollar weakened against higher-yielding currencies after U.S. lawmakers passed a bill undoing income-tax increases, helping avoid the so-called fiscal cliff and damping demand for refuge assets.

The U.S. currency fell versus most of its major peers even as Republicans vowed to fight President Barack Obama for spending cuts in exchange for raising the debt ceiling. A gauge of volatility dropped the most since June. The Australian and New Zealand dollars rallied, while the yen slid beyond 87 per dollar for the first time since July 2010 after Japanese Prime Minister Shinzo Abe reiterated his goal to weaken the currency.

"The move today is really all about the fiscal cliff," Brian Daingerfield, a currency strategist at Royal Bank of Scotland Group Plc's RBS Securities unit in Stamford, Connecticut, said in a telephone interview. "The reaction seems to be a very classic risk-positive move. It's a bit of a relief rally now that we did happen to get a deal."



The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
by dvx (dvx.clt št gmail dotcom) on Wed Jan 2nd, 2013 at 02:13:30 PM EST
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