The dollar weakened against most of its major counterparts after President Barack Obama said he would agree to sustain tax reductions to help the economy, boosting investor demand for higher-yielding assets. The yen fell from a three-week high against the dollar after Obama broke a stalemate about extending middle-class tax cuts introduced by the administration of George W. Bush. The euro rose versus the U.S. currency on speculation Ireland will pass an austerity budget today. The Norwegian krone and Australian dollar advanced as commodities rallied. “The potential for tax cuts to be extended at all income levels has markets quite excited and has also put renewed downward pressure on the U.S. dollar,” said Camilla Sutton, a Bank of Nova Scotia currency strategist in Toronto. “The commodity story is definitely a strong one and that’s helping Australia and Norway.” The dollar slipped 0.5 percent to $1.3374 per euro as of 8:28 a.m. in New York, from $1.3308 yesterday, when it touched $1.3442, the lowest since Nov. 23. The greenback rose 0.2 percent to 82.74 yen, after earlier touching 82.34 yen, the lowest since Nov. 12. The Japanese currency was at 110.67 per euro, from 110. Stocks, Commodities The MSCI World Index added 0.6 percent and crude oil for January delivery rose to as high as $90.46 per barrel, the most since Oct. 8, 2008. The Reuters-Jefferies CRB Index of raw materials gained 1 percent. Obama said he would accept lower rates on high earners’ income, dividends, capital gains and multimillion dollar estates for the next two years in exchange for extending federal unemployment insurance. The current tax rates, enacted in 2001 and 2003, are set to increase Dec. 31. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, fell 0.3 percent to 79.324. The euro gained against the dollar after European finance ministers ruled out immediate aid for Portugal and Spain or an increase to the 750 billion-euro ($1 trillion) crisis fund. Luxembourg Prime Minister Jean-Claude Juncker said late yesterday after chairing the ministers’ meeting that his group would “do everything to secure the financial stability in the euro zone.” Irish Vote Ireland’s parliament will vote today on its budget, which must be passed for an 85 billion-euro aid package to go into effect. The government is likely to win approval for austerity measures after independent lawmaker Michael Lowry said late yesterday he will support the budget today. “The probability is for passage of the budget, but it’s tight,” said Ray Farris, the London-based head of foreign- exchange strategy at Credit Suisse Group AG. “If they pass the budget then that probably helps the euro somewhat, but doesn’t rescue it, because markets will have concerns about Portugal and Spain going into next year.” The euro is unlikely to have a “relief rally” should the austerity budget be approved, and a drop by the currency remains possible, according to Barclays Plc. “We expect no relief rally for the euro; rather, at best we see wider concerns weighing on its progress and a small possibility of a sharp sell-off,” Sara Yates, a foreign- exchange strategist in London, wrote in a client note today. Adjusted Decline The euro has declined 9.3 percent this year in a measure of the currencies of 10 developed nations, according to Bloomberg Correlation-Weighted Currency Indexes. The dollar is down 2 percent, while the yen has gained 11.9 percent. The Aussie earlier fell after the Reserve Bank of Australia said interest rates are “appropriate,” reducing expectations for widening yield premiums on the nation’s assets. The central bank left the key rate at 4.75 percent today. Australia’s dollar added 0.6 percent to 99.59 U.S. cents. Norway’s krone rose 0.7 percent to 5.9529 per dollar. Oil is Norway’s biggest export. The pound rose against the dollar after U.K. manufacturing expanded twice as much as economists forecast in October and retail sales climbed, boosting demand for British assets. Sterling appreciated 0.5 percent to $1.5794, the strongest since Nov. 24. The benchmark FTSE 100 Index gained 1.3 percent. To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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