Yen, Dollar Weaken as U.S. Budget Accord Damps Demand for Refuge
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The yen and dollar weakened against higher-yielding counterparts 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 U.S. currency fell versus most major peers even as Republicans vowed to fight President Barack Obama for spending cuts in exchange for raising the debt ceiling. A gauge of volatility dropped the most since June. The Australian and New Zealand dollars rallied, while the yen slid beyond 87 per dollar for the first time since July 2010 after Japanese Prime Minister Shinzo Abe reiterated his goal to weaken the currency.