Dollar falls on hopes of budget deal

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Associated Press

Posted on November 29, 2012 at 2:01 PM

Updated Thursday, Nov 29 at 3:01 PM

NEW YORK (AP) — Hopes that U.S. politicians are closer to a budget deal are pushing traders to sell the dollar and buy riskier currencies.

Traders are worried about the U.S. "fiscal cliff," a series of tax increases and government spending cuts set to kick in at the beginning of next year unless the White House and Congress reach an agreement on reducing the budget deficit before then. Economists believe that could send the U.S. back into recession.

In the past couple of days, some politicians have said that are getting closer to a deal.

The euro rose to $1.2972 in afternoon trading from $1.2932 late Wednesday.

Riskier currencies, such as the euro, tend to rise when traders think the economy is getting better.

The British pound rose to $1.6036 from $1.6015.

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