By TraderVox.com
Tradervox.com (Dublin) – US Treasury Secretary Timothy F. Geithner is due to meet congressional leaders in a meeting set to discuss the fiscal cliff. This has caused the dollar to decline to 0.4 percent from its weakest level this month. According to Kengo Suzuki, a Tokyo-based currency strategist at Mizuho Securities Co, the fiscal cliff will lead to a dollar off while the US GDP figures will boost risk appetite which will spur yen selling.
Lawmakers have boosted the optimism of a possible of a solution to the fiscal cliff issue which has lead to the Dollar Index declining for the second day. The fiscal cliff, which will take effect in January, has boosted safety demand in the market. The yen has dropped against most of its major trading peers as Asian Stocks gained prior to a report expected to show US Gross Domestic Product expanded more than the market had previously estimated.
The Dollar Index used by the Intercontinental Exchange Inc to measure the US Dollar against other six major trading peers, dropped by 0.1 percent to 80.277 yesterday. The MSCI Asia Pacific Index of shares increased by 0.9 percent boosting demand for higher yielding assets.
Mitul Kotecha, the global head of Foreign Exchange strategy in Hong Kong at Credit Agricole Corporate and Investment Bank, said that investors are being driven by the headlines, with risk appetite increasing as positive news on the fiscal cliff are released. Mitul also added that currencies will continue to track the improvements in risk but they are likely to remain within range. The developments in the fiscal cliff issue came after the US House Speaker John Boehner indicated that he is optimistic that the lawmakers will avert the situation.
The US Dollar traded at $1.2954 against the 17-nation currency during the midday trading in Tokyo yesterday from its close of $1.2953 in New York the previous day. The greenback had touched its lowest on this month Nov 27 of $1.3009, which was last reached on Oct 31. The Japanese currency was little changed against the euro at 106.45 and 82.18 against the greenback.
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