MW:Dollar gains further versus yen, slips versus euro
By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — The dollar extended gains against the yen as a set of weak economic data further fueled expectations for policy easing in Japan, but was steady against the euro as markets considered U.S. lawmakers’ last-ditch efforts to avert the fiscal cliff.
The ICE dollar index DXY -0.10% , a measure of the greenback against a basket of six other major currencies, climbed to 79.647 from 79.622 in North America late on Thursday.
The move higher came even as markets considered the latest developments on talks to prevent a fiscal cliff, as well as the possible impact from different outcomes.
“If no deal is made by Dec. 31, but Congress pledges to make an announcement in the first two weeks of January, currencies and equities could drop only slightly in disappointment because investors will be willing to grant a short grace period,” analysts at India Forex Advisors wrote to clients.
They added, however, that risk currencies could see a sharp sell-off, leading investors to rush into safe-haven assets if talks “break down completely.”
President Barack Obama asked congressional leaders to come to the White House on Friday for talks to reach an agreement to avoid tax increases from spending cuts from next year. Read full story on Obama’s call for the meeting.
The yen extended its drop against major currencies after data released earlier on Friday showed Japan’s industrial output fell by a greater-than-expected 1.7% in November ( Read more about industrial output ), while a measure of consumer prices showed the country remained in the grip of deflation. Read more on price, employment data.
The dollar USDJPY +0.28% was buying ¥86.44, edging further higher from around ¥86.06 late in U.S. trading. The greenback traded above the ¥86 level for the first time since August 2010, according to FactSet.
The euro EURJPY +0.38% EURUSD +0.09% , meanwhile, climbed against the yen to ¥114.45 from ¥113.91, but was little changed at $1.3241 against the greenback.
Among other major currencies, the British pound GBPUSD +0.15% was fetching $1.6119 as compared to $1.6112, and the Australian dollar AUDUSD +0.09% was changing hands at $1.0375, down slightly from $1.0379.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau. Follow him on Twitter @MktwKumar.
