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

Shutterstock photo - The dollar rose against most of its peers on Monday as lawmakers rushed to reach a deal to steer the country away from the U.S. fiscal cliff, a potentially recessionary combination of sweeping tax hikes and automatic spending cuts due to take effect with the closure of 2012.

Failure to push through fiscal reforms and avoid the cliff could tip the country into a recession in 2013, and though markets were hopeful some sort of deal may materialize, investors flocked to the dollar to await some sort of announcement.

In U.S. trading on Monday, EUR/USD was down 0.15% at 1.3196.

President Barack Obama on Monday said an agreement was in sight though stressed nothing had been finalized yet, which kept investors favoring the safe-haven dollar throughout the last day of 2012.

Risk-on markets rallied before President Obama spoke on hopes a deal may be announced.

While the president stopped short of announcing a deal, sentiments began to quickly rebuild that some sort of an agreement may be reached by the end of the day, which enticed a few investors out of the safety of the greenback, hampering the U.S. currency's gains.

The greenback, meanwhile, was down against the pound, with GBP/USD trading up 0.41% at 1.6227.

In the U.K., the Bank of England reported earlier that housing equity withdrawal fell less than expected in the third quarter, official data showed on Monday.

In a report, Bank of England said that U.K. housing equity withdrawal fell to a seasonally adjusted GBP8.0 billion compared to GBP9.4 billion in the preceding quarter.

Analysts had expected U.K. housing equity withdrawal to fall GPB9.1 billion last month.

The dollar was up against the yen, with USD/JPY up 1.02% at 86.76 and up against the Swiss franc, with USD/CHF trading up 0.24% at 0.9158.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.32% at 0.9938, AUD/USD up 0.18% at 1.0392 and NZD/USD trading up 1.02% at 0.8282.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.18% at 79.94.

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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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