Dollar buoyed after US shutdown avoided

TOKYO—The dollar rallied in Asian trade before easing on Monday after Washington avoided a government shutdown by agreeing to cut around $38.5 billion from federal spending, dealers said.

The news was "positive for the dollar," said Yuichiro Harada, senior vice president of the Forex division at Mizuho Corporate Bank.

However, dealers warned that its momentum would fade, with the focus now on US March consumer price index data due Friday and speeches by Federal Reserve officials for clues on the course of monetary policy.

The euro was supported after South African President Jacob Zuma said in Tripoli on Sunday that Libyan leader Moamer Kadhafi had accepted an African Union peace plan designed to end the current conflict, dealers said.

However, it faded in later trading.

The single currency was at $1.4454 from $1.4480 late Friday. The yen was at 84.74 to the dollar from 84.82, after the greenback earlier rose to 85.16.

The Japanese unit was at 122.50 to the euro from 122.73.

A dramatic 11th-hour deal slashing spending staved off a US government shutdown, ending a rancorous budget row between President Barack Obama and his newly empowered Republican foes.

Party leaders clinched the agreement, including $38.5 billion of extra spending cuts, after intense bargaining, barely an hour before the federal government effectively ran out of money at midnight on Friday.

The yen's relative weakness since Japan and its G7 counterparts staged a concerted intervention in March has been driven partly by heightened risk appetite, fuelling demand for high-yield currencies, dealers said.

The greenback was mixed against other major Asian currencies, rising to 1,084.21 South Korean won from 1,083.03 on Friday, 43.05 Philippine pesos from 42.99 and to 30.06 Thai baht from 30.02.

The US unit fell to Sg$1.2556 from 1.2570 and to 8,642.50 Indonesian rupiah from 8,650.50. It was unchanged at Tw$28.93. (report from Agence France-Presse)