US Dollar Weighed Down By Concerns Over The US Fiscal Cliff

US Dollar Weighed Down By Concerns Over The US Fiscal Cliff

For the 24 hours to 23:00 GMT, EUR rose 0.27% against the USD and closed at 1.3099, boosted by efforts to tackle the debt problems of Greece and Spain, and as the greenback came under pressure from expectations of more bond buying by the Federal Reserve and amid persistent worries over the US fiscal cliff.

Yesterday, Federal Reserve board member, Daniel Tarullo called for broad new liquidity and capital rules for the US operations of large foreign banks, which would align them with that of American banks and protect the financial system.

Greece announced this week better-than-expected terms for its debt buyback, fueling optimism it would continue to receive international aid to avoid a default. Meanwhile, Spain’s formal request for European funds to recapitalize its banks this week also helped boost confidence in the single currency.

In addition, many market participants speculated that the US Federal Reserve would unveil a fresh bond purchase scheme to replace Operation Twist, in which it buys long-term maturities while selling shorter bonds, at its policy meeting next week.