Dollar dips in Asia

The dollar dipped in Asia on Monday as US lawmakers had yet to reach a deal to raise the country's debt ceiling with only a little over a week remaining before the deadline to avert a default. Most investors still assume that sanity will reign in Washington and a debt deal will be done, but the lack of progress in talks over how to cut the US budget deficit is making market players nervous.
The dollar fell to a four-month low against the yen of 78.12 yen and shed 0.6 percent against the Swiss franc to 0.8132 franc, about a centime away from its record low hit last week. The uncertainty over the US debt crisis also kept growth-linked currencies such as the Australian dollar in check. In Washington, White House officials and Republican leaders scrambled to look for ways to bridge gaps over a range of issues, including whether to raise taxes and cut social programmes to cut the deficit, and also over Republican demands for a short-term debt-limit increase that would force President Barack Obama to request further borrowing authority in early 2012.
The dollar held around 78.40 yen, near a four-month low of 78.12 yen hit earlier in the day. Many traders think it could test a record low of 76.25 yen if the US debt crisis drags on. The dollar's index against a basket of six major currencies stood at 74.202 , holding above Thursday's six-week low of 73.889. But having broken its months-old trendline support last week, the risk of breaking that low looks big, which could open the way for a test of its June low of 73.506 and year-to-date low of 72.696.
The euro briefly fell after Moody's downgraded Greece by three notches to Ca from Caa1, though the impact was short-lived as the move was hardly a surprise and as traders were gripped by the US debt saga. The euro was steady at $1.4365, and the eurozone's lingering debt issues were seen as brakes on the single currency's move higher. The sweeping bailout and policy package agreed by eurozone leaders last week has helped stem market panic in the short-run. But analysts say the measures may not be enough to bring the crisis to a swift resolution. The Australian dollar slipped 0.2 percent to $1.0820.