Shutterstock photo
Markets

Forex - Dollar rebounds after cliff deal

Shutterstock photo

Shutterstock photo

Investing.com - After being drubbed on the back of renewed risk appetite following news of the fiscal cliff deal, the U.S. dollar rose against most of the major currencies during Thursday's Asian session.

In Asian trading Thursday, EUR/USD fell 0.12% to 1.3172. The pair was likely to find support at 1.3144, the low from Dec. 17, and resistance at 1.3308, the high from Dec. 19.

News of the fiscal cliff deal, which will increase taxes on American households earning more than USD450,000 per year in an effort to increase revenue by USD620 billion over ten years, spurred equities and other riskier assets highers.

With the fiscal cliff deal done, traders may be showing signs of turning their attention to other pressing business U.S. policymakers must deal with including the debt ceiling.

Congress must extend the debt ceiling, or the amount of debt which the U.S. can carry at any one time, in February. That is sure to be another market-moving political debate because ratings agencies have already hinted that another downgraded to the U.S. sovereign credit rating is possible if the debt ceiling is not extended.

Standard & Poor's stripped the U.S. of the prestigious AAA credit rating in 2011, causing a slide U.S. stocks. Uncertainty over the debt ceiling issue could stoke demand for safe haven assets such as gold, though it is worth noting Congress has raised the debt limit 10 times in the past 10 years.

Those concerns may be part of the reason the dollar is trading higher today against riskier currencies. For example, GBP/USD is off 0.08% to 1.6243 while USD/CAD is higher by 0.11% at 0.9861.

The dollar is also making headway against some of the other safer currencies with USD/CHF spotted higher by 0.08% at 0.9187. USD/JPY was off 0.2% at 87.17.

U.S. stocks posted their best one-day performance in over a year during Wednesday's session, but the 2.54% gain for the S&P 500 and a 308-point for the Dow Jones Industrial Average may have been a case of too much too soon as the dollar gained against risk on counterparts. AUD/USD fell 0.17% to 1.0487 while NZD/USD slid 0.31% to 0.8316.

The U.S. Dollar Index climbed 0.1% to 79.98.

Investing.com - Investing.com 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.

Read more News on Investing.com or Follow us on Twitter at @ Newsinvesting

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.

Other Topics

ForEx