Tokyo - The dollar enjoyed a short rally against the yen in Asia on Thursday after US lawmakers reached a last-minute deal to avoid a catastrophic debt default.
But the rally was cut short on concerns that the deal only offered a short-term solution and does not resolve the budgetary issues that split Republicans and Democrats.
The US unit hit 99 yen in Tokyo morning trade - from 98.79 in New York on Wednesday - before settling back to 98.51 yen after Congress passed a bill extending the nation's borrowing limit and ending a two-week government shutdown.
However, the greenback remained above the 98.16 yen in New York on Tuesday.
The euro rose $1.3543 from $1.3535, but weakened to 133.47 yen from 133.74 yen.
Congress late on Wednesday passed a bill extending the US Treasury's borrowing authority until February 7, while also reopening the government until January 15, giving lawmakers time to hammer out a longer term deal.
“The US budget/debt ceiling drama appears over for now,” Credit Agricole said.
“We have a short-term extension but will likely be in a similar 'crisis' situation early next year... It's hard to be optimistic on any easy solution in the negotiations that will take place over the next few months.
“The real issue remains the longer-term deficit and debt trajectory, which is not sustainable,” it added.
Investors are now focused on the release of US data - including payrolls and retail sales - which was delayed due to the government shutdown. It is unclear when the key figures will be published.
On Wednesday, the Fed's closely-watched Beige Book report said the world's biggest economy was growing at a “modest to moderate” pace in recent weeks. But it added that there had been “an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate”.
The dollar was mixed against other Asia-Pacific currencies.
It fell to 10,942 Indonesian rupiah from 11,335 rupiah on Wednesday, to 43.12 Philippine pesos from 43.23 pesos, and to 61.60 Indian rupees from 61.83 rupees.
The greenback also slipped to 1,063.80 South Korean won from 1,066.52 won and to 31.13 Thai baht from 31.25 baht.
It firmed to Sg$1.2439 from Sg$1.2428 and to Tw$29.39 from Tw$29.36.
The Australian dollar hit a four-month high of 95.66 US cents early Thursday but eased slightly to 95.36 cents in afternoon trade, although it is still up from 95.20 cents on Wednesday.
The Chinese yuan bought 16.14 yen against 16.15 yen. - AFP