By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — The U.S. dollar inched higher on Thursday, regaining some ground lost in the previous session when optimism over “fiscal cliff” talks emerged.
The ICE dollar index DXY +0.05% which measures the greenback against a basket of six currencies, reached 80.271, from 80.262 in late U.S. trading on Wednesday.
The dollar slipped in the previous session, as investors focused on signs that budget talks could allow the U.S. economy to avert large-scale tax hikes and spending cuts.
“These latest signals are consistent with our constructive view on the outcome of the negotiations. Uncertainty is likely to linger for some time however, and the U.S. dollar should remain in a back-and-forth mode in reaction to the U.S. political news flow,” said currency strategists at BNP Paribas.
Against the yen USDJPY +0.11% , the dollar rose to ÂĄ82.10, from ÂĄ81.96 in late trading Wednesday.
Japan heads to the polls on Dec. 16 and strategists at India Forex Advisers said that markets widely expect that the leader of the main opposition party, the Liberal Democratic Party, Shinzo Abe will be elected as the country’s next prime minister.
“The yen weakened as it is expected that the Abe will force the Bank of Japan to adopt a higher inflation target and engage in easier monetary policy,” they said.
The euro EURUSD -0.07% edged up to $1.2955, from $1.2939 in late North American trading, while the British pound GBPUSD -0.02% reached $1.6018, from $1.601.
Sarah Turner is MarketWatch's bureau chief in Sydney. Follow her on Twitter @SarahTurnerMKTW.
