“The dollar gained for a second day against the euro as the deadline for U.S. lawmakers to reach a deal to avoid tax increases for almost all workers approached, spurring demand for the relative safety of the greenback.
The U.S. currency rose toward the strongest since August 2010 versus the yen after talks between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell stalled yesterday because of disputes over income-tax rates and other issues. The euro fell against all except two of its 16 major peers as German Chancellor Angela Merkel said the region’s debt crisis was “far from over.” The yen weakened on speculation the Bank of Japan will boost stimulus at its January meeting to spur growth.
“We could go right to the wire, that looks like the most likely scenario,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “If trading conditions become more risk averse, it could actually support the dollar in the near term if an agreement isn’t reached today.”
The dollar strengthened 0.2 percent to $1.3191 per euro at 7:44 a.m. New York time after gaining 0.2 percent on Dec. 28. The U.S. currency appreciated 0.2 percent to 86.17 yen after rising to 86.64 yen on Dec. 28, the strongest since Aug. 3, 2010. The yen was little changed at 113.66 per euro….”
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