* Obama re-election dents dollar, lifts riskier currencies
* Obama seen supportive of Federal Reserve's QE
* But Congress still divided, raising worries over fiscal
* Greece parliament vote in focus for euro
By Jessica Mortimer
LONDON, Nov 7 The dollar fell on Wednesday after
U.S. President Barack Obama's re-election for a second term,
which was seen ensuring Federal Reserve quantitative easing will
be in place.
But analysts said the dollar could soon resume its uptrend
trend if safe-haven flows are prompted by growing worries over
the looming U.S. "fiscal cliff". The country risks policy
paralysis over a sharp fiscal tightening due to start next year
unless a deal is reached in Congress to avert it
The end of uncertainty about the election result lifted
equities and riskier currencies, helping the higher-yielding
Australian dollar rise to its highest in nearly seven weeks and
the Canadian dollar to a three-week peak.
The dollar was down 0.3 percent against a basket of
currencies at 80.374, slipping further from Monday's
two-month high of 80.843.
The euro was up 0.4 percent at $1.2856, having hit a
high for the day of $1.28765.
But the euro risked coming under selling pressure on
uncertainty before a Greek parliamentary vote on austerity
measures necessary to secure the next tranche of bailout cash,
without which the country faces bankruptcy.
"There's a bit of relief that there was a clear result in
the U.S. presidential election, it's removed uncertainty which
is benefiting pro-cyclical currencies in particular," said Ian
Stannard, head of European currency strategy at Morgan Stanley.
"But this is likely to be short-lived, especially for the
euro due to caution about Greece and Spain."
The Democrats retained a majority in the Senate but the
Republicans held control of the House of Representatives, which
could lead to tough negotiations over the "fiscal cliff",
potentially prompting safe-haven flows into the U.S. dollar.
The knee-jerk reaction to Obama's re-election, however, was
positive for equities and riskier currencies because the
Republicans had expressed opposition to quantitative easing.
"There had been some concern in the run-up to the election
that a Romney victory would translate to premature monetary (and
fiscal) tightening, so today's outcome should reinforce
expectations for easy policy to be in place for longer," Citi
analysts said in a note.
The Australian dollar gained 0.4 percent to hit
$1.0480, its highest since Sept. 21, extending gains it made
after the Reserve Bank of Australia surprised some market
players by not cutting rates on Tuesday.
The U.S. dollar also fell against the Canadian dollar
Against the yen the dollar fell to as low as 79.81
yen, nearly a full yen below its four-month high of 80.68
yen hit last week, before bouncing back slightly to 80.23 yen,
still down 0.1 percent on the day.
The dollar's drop came as the 10-year U.S. Treasuries yield
dropped as much as seven basis points to 1.68 percent
The euro bounced from a two-month low of $1.2763 hit on
Tuesday to rise back above its 200-day moving average, a key
chart level, at $1.2827.
However, it stalled ahead of another chart indicator, the
top of the daily Ichimoku cloud, around $1.2878.
Greece's coalition government hopes to overcome its own
divisions to push through parliament on Wednesday the austerity
package needed to avert bankruptcy.
Prime Minister Antonis Samaras is expected to narrowly win
support for the cocktail of budget cuts, tax hikes and labour
reforms, but the smallest party in his coalition will oppose the
measures, leaving him with a margin of just a handful of votes.
Meanwhile, the market remained concerned that Spain could
delay seeking international aid, which could weigh on the euro.
While analysts think some sort of a "fiscal cliff"
compromise can be reached by the end of the year between the
Democrats and Republicans, investors are worried about a repeat
of a showdown last year that led to downgrade of the U.S. credit