Reuters: US Dollar Report: FOREX-Dollar rises to two-month high on fiscal worries

Reuters: US Dollar Report Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

FOREX-Dollar rises to two-month high on fiscal worries Nov 7th 2012, 15:03 Wed Nov 7, 2012 10:03am EST * Investors look past Obama re-election to focus on 'fiscal cliff' * ECB's Draghi: euro zone to remain weak in the near term * Greece, Spain worries dent euro sentiment By Wanfeng Zhou NEW YORK, Nov 7 (Reuters) - The dollar rose to a two-month high against major currencies on Wednesday as investors quickly shifted focus to U.S. fiscal woes after President Barack Obama's re-election, bolstering the appeal of the safe-haven U.S. currency. The euro came under pressure after ECB President Draghi said the bank expects the euro zone economy to remain weak "in the near term," adding to investor nervousness ahead of the central bank's policy meeting on Thursday. With election out of the way, the U.S. president faces a fresh challenge confronting the "fiscal cliff," a mix of tax increases and spending cuts due to extract some $600 billion from the economy starting Jan. 1 barring a deal with Congress. "For the past couple of years, generally bad news, regardless of where it happens - whether it's in the U.S. or abroad - has been good for the dollar. And while there's evidence that relation has moderated, it's still there," said Ron Leven, senior currency strategist at Morgan Stanley in New York. The dollar index, which tracks the greenback versus a basket of currencies, rose 0.3 percent to 80.803, having hit as high as 80.924, its highest since Sept. 7. The euro fell as low as $1.2734 on Reuters data, a two-month low, hurt by grim economic forecasts for the euro zone and continued sovereign debt-related worries in Greece and Spain. It was last at $1.2760, down 0.4 percent. Against the yen, it lost 0.9 percent to 102.03 yen. The currency faced further pressure ahead of a Greek parliamentary vote on austerity measures necessary to secure the next tranche of bailout cash, without which the country faces bankruptcy. "Uncertainty over the Greek vote and the U.S. fiscal cliff are both major risk factors which are weighing on the euro," said Jane Foley, senior currency strategist at Rabobank. "If the Greek vote doesn't go through, there is a lot of downside risk to the euro as talk of a Greece exit will re-emerge." Prime Minister Antonis Samaras is expected to narrowly win but the smallest party in his coalition will oppose the measures, leaving him with a margin of just a handful of votes. The market also remained concerned that Spain could delay seeking international aid. The European Central Bank will decide on interest rates on Thursday and while no change is expected, a slew of grim data out of the euro zone is likely to keep alive chances of further cuts. Earlier in the day, the clear-cut U.S. election result lifted stocks and riskier currencies, boosting the higher-yielding Australian dollar rise to its highest in nearly seven weeks and the Canadian dollar to a three-week peak. But that trend soon fizzled out as investors turned their attention to the euro zone's problems and the U.S. fiscal cliff. Against the yen, the dollar fell to as low as 79.80 yen on Reuters data, well below its six-month high of 80.67 hit last week. It was last down 0.5 percent at 79.91 as yields on U.S. Treasuries fell sharply. Analysts at Morgan Stanley said they are maintaining their bullish strategy for dollar/yen and expected a re-test of the 80.70 high, with a break above there opening the way for gains towards their 84.00 target. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions