Italian 10-year bond yields fell to 4.42 percent, the sixth-straight daily decline and the lowest level since 2010. Spain’s similar-maturity bond yield dropped to 5.2 percent, the third-straight decline.
The Dollar Index dropped to a five-week low as House Republicans rejected Obama’s demand for higher tax rates and countered with a $2.2 trillion deficit-cutting plan. The proposal seeks $800 billion in tax revenue in the next decade and would slow growth in Social Security payments.
The two sides remain far apart with about four weeks left before more than $600 billion in tax increases and federal spending cuts start taking effect in January, possibly triggering a recession.
“The dollar is looking a little tired,” said Kumiko Gervaise, an analyst at Gaitame.com Research Institute Ltd. in Tokyo. “If the market starts to pay more attention on the negative factors for the U.S., such as the deadlock in fiscal cliff negotiations, the dollar would be sold.”
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against currencies of six U.S. trading partners, fell 0.3 percent to 79.657 after sliding to the lowest since Oct. 23.
The Swiss franc fell as Credit Suisse Group AG was said to be imposing negative interest rates of up to minus 1 percent on cash balances held by financial institutions.
The Swiss currency weakened versus all its 16 major counterparts after three people with knowledge of the matter said Credit Suisse will set negative interest rates on the cash balances of its financial-institutional clients held in francs at as much as minus 1 percent.
Marc Dosch, a spokesman for the Zurich-based bank, said the rates are being set for each client individually. “We invite our customers to keep cash balances as low as possible to avoid negative credit charges,” according to a notice confirmed by Credit Suisse yesterday.
The franc fell 0.4 percent to 1.2134 per euro after depreciating to the weakest since Sept. 18.
Australia’s dollar rose versus all except one its major peers as investors looked past an interest-rate cut by the central bank, which said demand from outside the mining industry may increase.
The Reserve Bank of Australia lowered its overnight cash- rate target to 3 percent from 3.25 percent, a decision predicted by 20 of 28 economists surveyed by Bloomberg.
“People are itching to call the RBA done for now, and you can probably pull parts of today’s statement that would strengthen that argument,” said Michael Turner, a fixed-income strategist in Sydney at Royal Bank of Canada. “The Aussie, on a rate-differential argument, should be well-supported.”
The so-called Aussie appreciated 0.6 percent to $1.0478.