FOREX-Euro falls, yen gains as Boehner drops "fiscal cliff" plan

Fri Dec 21, 2012 7:50am IST

* Republicans pull tax bill from House floor

* US House to adjourn until after Christmas

* Thin year-end markets exacerbating FX swings -analyst

By Masayuki Kitano

SINGAPORE, Dec 21 (Reuters) - The euro fell against the dollar on Friday as Republican House Speaker John Boehner abandoned his Bill to avoid the "fiscal cliff", conceding there weren't enough votes for it in the chamber.

Boehner handed back responsibility for getting a bill passed to President Barack Obama and his Democrat-dominated Senate, and Republican Representative Peter Roskam said the U.S. House of Representatives would adjourn until after Christmas,

The euro fell 0.3 percent to $1.3208, pulling away from an eight-month high of $1.33085 that had been hit on Wednesday on trading platform EBS.

"The market is jittery and unsure about what might happen," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

Some market players, however, were still holding out hope for an eventual compromise, he said, adding that currency swings were being exaggerated in thin year-end market conditions.

The renewed jitters over the fiscal cliff, steep U.S. tax increases and spending cuts due to take effect early next year, dented risky assets and currencies and lifted the safe-haven U.S. dollar.

The yen, which has been pressured by market expectations that a new Japanese government would push the Bank of Japan into more forceful monetary easing, regained a bit of ground as risk appetite fell.

The dollar eased 0.2 percent to 84.23 yen, inching away from a 20-month high of 84.62 yen struck on Wednesday. The euro fell 0.5 percent to 111.20 yen.

The Australian dollar slipped 0.3 percent to $1.0447 .

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