Dollar slips vs euro as Fed taper talk heats up

NEW YORK: The dollar weakened against the euro as speculation heated up about when the Federal Reserve might decide to pull back its extraordinary monetary stimulus.

The euro bought $1.3433 around 2300 GMT, up from $1.3407 Monday.

The dollar, however, rose against the Japanese currency, to 99.62 yen from 99.20 yen. Earlier in the day it hit a two-month high of 99.80 yen.

The euro rose to 133.82 yen from 133.01 yen.

The greenback also gained against the British pound, which fell to $1.5899 from $1.5981.

Currency traders seemed to focus on the prospect of the Fed starting to cut its $85 billion a month asset-purchase programme, with some analysts suggesting the move could come as soon as the Federal Open Market Committee's December 17-18 monetary policy meeting.

"Investors leaned back on the less-dovish comments from Dallas Fed President (Richard) Fisher who called recent job numbers not that bad and said monetary accommodation grows riskier by the day," said Kathy Lien of BK Asset Management.

"While Fisher is not a voting member of the FOMC this year, his views should not be ignored because he votes in 2014," Lien said.

On the other hand, the president of the Atlanta Fed, Dennis Lockhart, said in an interview with Bloomberg Radio that in deciding whether to reduce bond purchases the Fed should "focus mostly on employment and inflation, both of which are pretty far from the mandate-consistent levels we are seeking."

The dollar slipped against the Swiss currency, to 0.9176 franc from 0.9194 franc. (AFP)