Dollar lower against euro amid fiscal cliff hopes

Shutterstock photo - The U.S. dollar hit five-month lows against the euro on Tuesday, as signs of headway in negotiations on the U.S. fiscal cliff buoyed investor sentiment, boosting demand for the single currency.

During U.S. morning trade, the greenback was trading close to its lowest level since early May against the euro, with EUR/USD rising 0.27% to 1.3198.

Talks aimed at avoiding the automatic tax hikes and spending cuts, which investors fear could derail the U.S. recovery, have intensified in recent days, raising hopes that lawmakers will reach an agreement ahead of the January 1 deadline.

The dollar was trading close to a 20-month peak against the yen, with USD/JPY up 0.19% to 84.03.

The yen remained under broad selling pressure after an election victory for Japan's Liberal Democratic Party over the weekend fuelled expectations for more aggressive monetary easing steps by the Bank of Japan, ahead of an upcoming policy setting meeting on Thursday.

The greenback slipped to two-and-a-half month lows against the pound, with GBP/USD climbing 0.21% to 1.6242.

Earlier Tuesday, the Office for National Statistics said that the annual rate of consumer price inflation in the U.K. held steady at 2.7% in November after an unexpected increase in October, compared to expectations for a dip to 2.6%.

The greenback hit seven-month lows against the Swiss franc, with USD/CHF down 0.43% to 0.9135.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD edging up 0.10% to 0.9844, AUD/USD dipping 0.01% to 1.0540 and NZD/USD losing 0.30% to trade at 0.8424.

The Australian dollar found support after the minutes of the Reserve Bank of Australia's December meeting indicated that the interest rate cut decision was a close call, raising the view that the bank may delay further easing measures in 2013.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.26% to 79.42.

Also Tuesday, official data showed that the U.S. current account deficit narrowed to USD107.53 billion in the third quarter, from USD118.1 billion in the previous quarter, the lowest level since 2010. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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