Forex - Dollar gains as market frets looming debt ceiling debates

Shutterstock photo - The dollar rose against most of its peers on Thursday as investors raced to the safe-haven currency on concerns that U.S. lawmakers, fresh off a successful aversion from the fiscal cliff, will engage in partisan bickering amid upcoming debt-ceiling debates.

Investors also opted for the dollar to await Friday's December jobs report.

In U.S. trading on Thursday, EUR/USD was down 0.93% at 1.3064.

The U.S. House of Representatives voted in favor of tax and spending reforms needed to avoid the fiscal cliff late Tuesday, sparing the U.S. of a possible recession that would have resulted from sweeping tax hikes and deep spending cuts taking affect at the same time.

However, appetite for the safe-haven dollar quickly returned, as lawmakers must now debate raising the U.S. government's USD16.4 trillion debt ceiling likely sometime around February.

The Treasury can delay defaulting temporarily via taking extraordinary measures though lawmakers must eventually vote to lift it.

In 2011, Congress waited until the last minute to raise the debt ceiling, narrowly avoiding default.

Conflicting data out of the labor market also kept investors safely positioned in the greenback, especially ahead of the December jobs report due for release in the U.S. on Friday.

Payroll processer ADP said earlier that non-farm private employment rose by a seasonally adjusted 215,000 in December, beating market calls for an increase of 133,000.

November's figure was revised up to a gain of 148,000 from a previously reported increase of 118,000.

Separately, the U.S. Department of Labor reported that the number of individuals filing initial jobless claims during the week ending Dec. 29 rose by 10,000 to a seasonally adjusted 372,000, compared to expectations for a decline of 7,000 to 355,000, which dampened the ADP's data.

Jobless claims for the preceding week were revised up to 362,000 from a previously reported 350,000.

The dollar was down against the yen, with USD/JPY down 0.19% at 87.18 after the Federal Reserve released the minutes of its December monetary policy meeting, revealing that while U.S. central bankers are discussing winding down stimulus measures, such a decision won't come in the coming months.

"A few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases," the Fed minutes read.

"Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted."

The dollar, meanwhile, was up against the Swiss franc, with USD/CHF trading up 0.91% at 0.9262.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.29% at 0.9878, AUD/USD down 0.31% at 1.0472 and NZD/USD trading down 0.70% at 0.8282.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.78% at 80.53. - 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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