Euro down against dollar on fiscal cliff deal fears

SINGAPORE: The euro fell against the dollar in Asia Thursday as euphoria over the US fiscal cliff deal gave way to concerns about future budgetary rows in Washington.

The single currency bought $1.3137 in afternoon Asian trade from $1.3184 in New York late Wednesday, while it was also at 114.62 yen from 115.13 yen.

The greenback traded at 87.25 yen from 87.32 yen.

The dollar lifted against the European unit as doubts emerged over the 11th-hour deal reached Wednesday to prevent the huge tax hikes and spending cuts kicking in that would have likely sent the economy into recession.

"Currency traders may be positioning themselves for the troubles that lie ahead for the US economy as Congress confronts spending cuts in two months' time," IG Markets said in a report.

"Investors realised that the fiscal problem is far from over as the debate on raising the debt ceiling looms... we expect an uglier showdown than the tax issue," Phillip Futures stated in their own report.

Stock markets worldwide rallied after US lawmakers cobbled together a last-gasp deal to avert the fiscal cliff on New Year's Day.

However, while the plan saw tax rises for only the rich, lawmakers only delayed the imposition of spending cuts for two months, meaning another debilitating stand-off is almost certain at the end of February.

Other feuds yet to be addressed include lifting the US debt ceiling and funding government operations.