The dollar halted decline versus the euro on bets a U.S. budget agreement will boost prospects for tapering the Federal Reserve’s stimulus program which tends to debase the currency.
The Bloomberg U.S. Dollar Index snapped a four-day decline after budget negotiators unveiled an agreement to ease automatic spending cuts by about $60 billion over two years and reduce the deficit by $23 billion. The yen rebounded from a six-month low versus the greenback and the weakest in five years against the euro after technical indicators signaled its recent losses were excessive.
“There is some dollar-buying as the U.S. budget deal is getting close to being passed,” said Kengo Suzuki, the Tokyo-based chief currency strategist at Mizuho Securities Co., a unit of Japan’s third-biggest financial group by market value. “One of the reasons why Fed tapering was postponed in September was uncertainty over budget talks, so a deal would make the tapering more likely.”
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