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Forex - Dollar gains as market awaits word on fiscal cliff deal

By: Investing.com
Posted: 12/28/2012 4:40:00 PM
Referenced Stocks:

Investing.com - The dollar rose against most of its peers on Friday as investors largely flocked to the safe-haven currency to await signs of progress in U.S. negotiations to avoid the fiscal cliff, a year-end combo of tax hikes and deep spending cuts taking effect simultaneously at year's end.

Failure to push through tax and spending reforms and avoid the cliff could tip the country into a recession in 2013.

In U.S. trading on Friday, EUR/USD was down 0.13% at 1.3221.

President Barack Obama was meeting with congressional Democrats and Republicans on Friday to find a way to avoid careening over the fiscal cliff.

Investors remained parked in a wait-and-see mode as the meeting took place, which sent the dollar gaining.

While Jan. 1 can come a go without a deal, as tax hikes and spending cuts will take some time to materialize, markets will roil if U.S. leaders fail to resolve the fiscal cliff early in 2013.

Elsewhere, investors kept an eye on U.S. and European data though most attention remained focused on Washington.

In the U.S. earlier, the National Association of Realtors revealed that pending home sales beat expectations in November, rising by 1.7% after a 5% increase the previous month.

Analysts were expecting pending home sales to rise by 1.0% in November.

Elsewhere in the U.S., the Chicago's purchasing managers' index rose to 51.6 in December, up from 50.4 in November and beating expectations for a rise to 51.0.

Meanwhile in Europe, the Markit research group reported earlier that the eurozone's retail purchasing managers' index fell to 44.5 in December from 45.8 the previous month.

Elsewhere, official data revealed that French consumer spending rose 0.2% in November, more than market forecasts for a 0.1% increase and from a 0.1% decline the previous month.

Also in France, the country's gross domestic product rose less than expected in the last quarter.

The country's National Institute for Statistics and Economic Studies said that French GDP rose by a seasonally adjusted 0.1% in the third quarter from 0.2% in the preceding quarter.

Analysts were expecting French GDP to rise 0.2% in the third quarter.

The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.35% at 1.6157.

The dollar was flat against the yen, with USD/JPY unchanged at 86.11 and up against the Swiss franc, with USD/CHF trading down 0.03% at 0.9131.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.07% at 0.9958, AUD/USD down 0.05% at 1.0372 and NZD/USD trading down 0.13% at 0.8200.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.08% at 79.78.








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