What a 'Fiscal Cliff' Deal Does to the Dollar

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To quote the late great Etta Jones, "at laaaaast."

President Obama and House Speaker John Boehner appear to be making actual headway in their 'fiscal cliff' negotiations, and stocks are reacting with relief.

That's nice - but Steven Englander, head of G10 FX strategy at Citigroup, is underwhelmed. U.S. stocks have not reacted as strongly as other equity markets to the negotiating progress, he says. And he's expecting even less from the dollar.

Englander compared the performance of the S&P 500 stock index since November 15, its recent low, to the performance of overseas indices. Since mid-November, he says, "the major 'good' news has been the greater optimism on the fiscal cliff." You might think that U.S. stocks would get the biggest bounce, but in fact, Englander says, "the S&P is a laggard even though the good news is coming out of the U.S."

Englander also compared the dollar's performance since November 15 to that of 31 other major currencies. The greenback fell against 26 of them, even as signs mounted that Obama and Boehner were actually making some kind of headway.

The bottom line? "In terms of the dollar, even though it's good news for the U.S. economy, it may be better news for the rest of the world," Englander told CNBC. "We don't think it's going to be positive for the dollar."

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