* Euro comes off 2-month low vs dollar, soft against Aussie
* U.S. election results could impact "fiscal cliff" talks
* Greek parliament to vote on austerity reforms
NEW YORK, Nov 6 The U.S. dollar slipped against
most major currencies on Tuesday as investors bet the greenback
recently had risen too far and too fast given the outlook for
the U.S. economy and problems in Europe, though trading was
subdued ahead of the results of the U.S. presidential election.
The euro hit a two-month low against the dollar before
recovering to trade higher ahead of parliamentary vote in Greece
on the country's austerity reforms needed to secure
In the U.S. election, opinion polls showed President Barack
Obama and Republican challenger Mitt Romney in a dead heat,
although Obama has a slight advantage in several swing states.
With the Republicans seen retaining control of the U.S.
House of Representatives, a victory for Obama would be seen as
raising the risk of policy paralysis over the "fiscal cliff."
If Congress cannot agree new arrangements, about $600
billion in government spending cuts and higher taxes will kick
in early next year, all of which could hurt U.S. economic
growth. Ironically, these worries have boosted the dollar, which
is seen as a safe haven, in recent days.
"For FX in the near term the key driver is the fiscal cliff;
however, in the medium term it is the ability to craft a
credible fiscal plan, the growth outlook and who is likely to
lead the Fed in January 2014," said Camilla Sutton, chief
currency strategist at Scotia Capital in Toronto.
Romney has said that he would not reappoint Ben Bernanke as
chairman of the Federal Reserve if he wins, though it is also
not clear if Bernanke would go for a third term when his current
tenure ends in January 2013.
The euro rose 0.2 percent to $1.2816 after an early drop to
$1.2761 on Reuters data, its lowest in two months. That
was well below its Sept. 17 high of $1.3169 struck after the
European Central Bank pledged to buy government bonds of
struggling euro zone countries that requested help.
Immediate support is seen around $1.2736, the 38.2 percent
retracement of the euro's July to September rally. Some $3.9
billion in euros had changed hands in the global trading day by
midafternoon in New York.
Greek workers begin a 48-hour strike on Tuesday to protest
against a new round of austerity cuts that unions say will
devastate the poor and drive a failing economy to collapse.
Athens needs parliamentary approval for the package, which
includes slashing pensions by as much as a quarter for some and
scrapping holiday bonuses, to ensure the European Union and
International Monetary Fund release more than 31 billion euros
($40 billion) of aid.
"We are seeing investors getting disillusioned about the
euro zone, the positive factor from the ECB's plan to buy bonds
is fading, and that is fundamentally weighing on the euro," said
Neil Mellor, currency strategist at Bank of New York Mellon in
"There isn't much progress on when Spain will seek a
bailout, and now we have the Greek vote. Suffice it to say if
the vote fails, the euro will drop and the dollar will rally,
but even if the vote passes, any rally in the euro will be
Traders said investors were adding to short positions
against the euro and looking to sell at higher levels after weak
euro zone manufacturing data bore grim tidings for the fourth
quarter and German industrial orders slumped in September.
The dollar was up 0.1 percent at 80.35 yen but below
a six-month high of 80.67 yen hit on Friday.
The Australian dollar climbed to a six-week high
after Australia's central bank decided against a rate cut and
kept its benchmark rate at 3.25 percent, citing higher inflation
and an improved global background, although it left the door
open to more stimulus if needed.
Nick Bennenbroek, head of currency strategy at Wells Fargo
in New York, said the more favorable trend for foreign
currencies may not last too long because politicians will soon
begin budget negotiations after the election.
"Past experience suggests those budget talks will be
challenging and that markets may be entering a more uncertain
phase - an environment that would be negative for equities but
positive for the U.S. dollar and yen."