Dollar Moves Up As Investors Watch Fiscal Talks

The dollar pushed slightly higher across the board Friday as markets nervously considered U.S. lawmakers’ last-ditch efforts to avert the fiscal cliff, and Wall Street looked set for more losses.

The ICE dollar index , which gauges the greenback against a basket of six other major currencies, climbed to 79.672 from 79.622 in North America late Thursday.

The euro  moved lower against the greenback and was last at $1.3222.

The dollar’s move came as investors wavered over whether the latest developments on talks to prevent billions in automatic U.S. tax hikes and spending cuts will indeed meet that goal, with just a handful of days left for lawmakers to negotiate.

“If no deal is made by Dec. 31, but Congress pledges to make an announcement in the first two weeks of January, currencies and equities could drop only slightly in disappointment because investors will be willing to grant a short grace period,” analysts at India Forex Advisors wrote to clients.

They added, however, that so-called risk currencies could see a sharp selloff, leading investors to rush into safe-haven assets if talks “break down completely.”

President Barack Obama is meeting with congressional leaders at the White House on Friday for talks to reach an agreement to avoid tax increases from spending cuts from next year.

The yen pushed lower earlier against major currencies after data released earlier Friday showed Japan’s industrial output fell by a greater-than-expected 1.7% in November, while a measure of consumer prices showed the country remained in the grip of deflation.

The dollar was buying ¥86.10, compared with ¥86.06 late in U.S. trading. The greenback traded above the ¥86 level for the first time since August 2010, according to FactSet.

Among other major currencies, the British pound  was fetching $1.6154 compared with $1.6112.

Marketwatch