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Dollar mixed on US fiscal cliff signals

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NEW YORK, Dec 31 AFP

January 01 2013, 10:57AM

The US dollar was mixed against other major currencies on Monday after US politicians hinted that a partial agreement on avoiding the fiscal cliff was at hand.

Hours before the midnight deadline, US political leaders looked set to strike a last-gasp deal that resolves the tax side of the fiscal cliff crisis but was not expected to curb rising federal spending.

BKForex Advisors analyst Kathy Lien noted that a deal would not happen before the deadline because the Republican-controlled House of Representatives did not plan to hold a vote before midnight.

"This means that the US economy will fall off the fiscal cliff but the price action in the financial markets suggests that investors aren't worried," she wrote in a research note.

"Currencies and equities soared today after Senate Republican Leader Mitch McConnell said they are 'very, very close' to reaching an agreement on taxes."

Trading was thin ahead of New Year celebrations, with many financial markets closed in Europe and Asia for a public holiday.

The euro slipped to $US1.3192 around 2200 GMT (0900 AEDT) from $US1.3217 at the same time on Friday.

The euro rose against the Japanese currency, to 114.45 yen from 113.62 late on Friday, while the dollar climbed to 86.69 yen from 85.98 yen.

The dollar edged higher against the Swiss currency, rising to 0.9147 francs from 0.9134 francs late on Friday.

But it weakened against the British pound, which fetched $US1.6248 compared with $US1.6167 Friday.