US dollar rebounds against euro in Asia

The euro reversed earlier gains against the greenback, falling to US$1.3202 in afternoon Asian trade from US$1.3217 in late U.S. trade Friday. The U.S. dollar was also at 86.12 yen from 85.98 yen.

The euro bought 113.69 yen from 113.62 yen.

Traders were plumping for the greenback after Asian bourses closed for a half-day New Year's Eve holiday, said Yang Weiming, premium client manager for IG Markets Singapore.

“I think it could be due to most Asian equity markets closing half-day. Traders may be taking more risk off trades as Asian market close to resume next year,” he told AFP.

The strengthening greenback came against trader pessimism that a bipartisan deal could be reached between bickering U.S. politicians before a package of government spending cuts and tax hikes take effect on Tuesday.

Analysts fear that if a deal is not reached within the next few hours to prevent the U.S. going over the fiscal cliff, the economy could tip into recession.

Despite marathon talks between Democrats and Republicans little progress appeared to have been made.

Senate Republican minority leader Mitch McConnell warned that negotiators were still a long way from success, with Democrats not responding to a “good faith offer” his party had made.

Senate Democratic leader Harry Reid agreed talks were at a standstill.

The U.S. dollar was weaker against most Asia-Pacific currencies, slipping to 1,065.92 South Korean won from 1,070.90 won on Friday, to 30.59 Thai baht from 30.63 baht and to 9,630 Indonesian rupiah from 9,733 rupiah.

It was at SG$1.2226 from SG$1.2235, at 54.78 Indian rupees from 54.87 rupees and 41.04 Philippine pesos from 41.26 pesos.

The Australian dollar bought US$1.0385 from US$1.0374 while China's yuan was at 13.81 yen from 13.85 yen.

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