The Yen and the U.S. Dollar, two major safe haven currencies, declined against their live Forex peers after U.S. lawmakers passed a bill designed to avert the fiscal cliff and therefore prevent the U.S. from slipping into a recession. The greenback weakened even as the Republicans pledged to challenge President Barack Obama on spending cuts in exchange for increasing the debt ceiling.
Other Forex news showed that the currency exchange experienced a brief relief rally. However, the rally began to wane as many questions about the debt ceiling were left unanswered.
Meanwhile, the New Zealand and Australian Dollars strengthened while Japan’s Yen dipped further. This took place following comments by Prime Minister Shinzo Abe who in a New Year’s statement suggested that the most urgent matter right now was to prevent the currency from appreciating further. He added that stemming deflation was equally important. The Prime Minister asked the central bank to engage in unlimited money printing in order to bolster growth and to achieve an inflation target of 2%.
Other Forex exchange reports confirmed that Canada’s Dollar advanced the most in three months versus its American counterpart after the U.S. announced the approval of a deficit-reduction agreement to avoid the threat of recession. The Loonie gained against the rest of its peers after the deal was approved by the U.S. Senate on New Year’s Eve, clearing the way for it to become law.
Lastly, the British Pound rose as the U.K. reported that its manufacturing sector went from contraction to expansion.