Investing.com - The U.S. dollar was lower against the euro and the pound on Wednesday, but rose to a 29-month high against the yen after U.S. lawmakers reached an agreement to avert the fiscal cliff, sparking a broad based risk rally.
During European morning trade, the greenback was trading within striking distance of a nine-month high against the euro, with EUR/USD up 0.39% to 1.3245.
Risk appetite sharpened after U.S. lawmakers passed a compromise bill on Tuesday to avoid the fiscal cliff, blocking a series of looming tax increases and spending cuts that could have pushed the U.S. economy back into a recession.
In contrast, the dollar was trading close to two-and-a-half-year highs against the yen, with USD/JPY up 0.34% to 87.03.
Investors continued to shun the yen amid ongoing expectations for more aggressive easing measures by the Bank of Japan.
The greenback was close to 16-month lows against the pound, with GBP/USD rising 0.30% to 1.6291.
In the U.K., data showed that manufacturing activity expanded unexpectedly in December, growing at the fastest pace since September 2011.
The U.K. manufacturing purchasing managers' index came in at 51.4, from an upwardly revised reading of 49.2 in November. Analysts had expected the manufacturing PMI to remain unchanged.
The greenback was hovering close to eight-month lows against the Swiss franc, with USD/CHF down 0.28% to 0.9125.
The greenback was broadly weaker against its Canadian, Australian and New Zealand counterparts, with USD/CAD falling 0.67% to 0.9855, AUD/USD advancing 0.79% to 1.0476 and NZD/USD gaining 0.88% to trade at 0.8358.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.32% to 79.62.
Later Wednesday the Institute of Supply Management was to produce a report on U.S. manufacturing growth.
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