“The yen and dollar weakened against higher-yielding currencies after U.S. lawmakers passed a bill undoing income-tax increases, helping avoid the so-called fiscal cliff and damping demand for refuge assets.
The Dollar Index fell the most in five weeks even as Republicans vowed to fight PresidentBarack Obama for spending cuts in exchange for raising the debt ceiling. The Australian and New Zealand dollars rallied and the pound rose to a 16-month high versus the U.S. currency. The yen slid beyond 87 per dollar for the first time since July 2010 after Japanese Prime Minister Shinzo Abe reiterated his intention to weaken the currency.
“There’s been a relief rally but most people expected the U.S. would come to some sort of a deal so this had been priced in,” said Eimear Daly, a currency-market analyst at Monex Europe Ltd. in London. “Currencies like the Australian dollar have also done very well. Breaking through 87 is a massive deal for dollar-yen.”
The dollar declined 0.4 percent to $1.3247 per euro at 6:14 a.m. New York from Dec. 31 after falling as much as 0.8 percent, the biggest drop since Nov. 23. The yen depreciated 0.9 percent to 115.49 per euro after sliding to 115.99, the lowest since July 8, 2011. The yen slid 0.5 percent to 87.16 per dollar. It reached 87.33, the weakest since July 29, 2010.
The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, slid 0.3 percent to 79.499 after dropping as much as 0.6 percent, the most since Nov. 23….”
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