Dollar slips on fiscal solution optimism A risk-on start to the week dominated foreign exchange markets with most of the major currencies carried higher against the dollar. The euro gained 0.2 per cent against the US currency to $1.2769 as optimism about an eventual outcome of the US fiscal cliff negotiations won out over concerns about Tuesday's Eurogroup meeting. Jane Foley at Rabobank said: "Hopes that US politicians can avoid the fiscal cliff have been gaining traction over the weekend after US lawmakers expressed confidence that they can reach a deal." Market watchers remained wary of Tuesday's meeting of the eurozone's finance ministers when Greece's funding problems and debt-levels will be back in the spotlight. However, while appearing somewhat jaded, traders expected a positive result from the meeting and argued that a failure to deliver would damage sentiment. The dollar index, within which the euro holds a 57.6 per cent weighting, fell 0.3 per cent to 81 points. The Australian dollar gained 0.6 per cent against its US equivalent to $1.0394 ahead of the release of the minutes from the Reserve Bank of Australia's October policy meeting. The Aussie also gained 0.4 per cent against a resilient Japanese yen to Y84.37. The yen, a traditional haven currency, bucked the risk-on trend somewhat, and gained marginally against the dollar, to Y81.16, while remaining flat against the euro, at Y103.633, as investors paused ahead of Tuesday's Bank of Japan policy announcement. The yen fell sharply last week after prime minister Yoshihiko Noda dissolved parliament and called for an early election to be held on December 16. The yen's 2.3 per cent drop against the dollar and 2.5 per cent drop against the euro by Friday, was predicated on the idea that the incoming head of the opposition Liberal Democratic party, and likely next prime minister, Shinzo Abe will put added pressure on the Bank of Japan to implement powerful new easing measures. He has recently called for the BoJ to pursue unlimited easing, to push interest rates to zero or below to spur lending, for a significantly increased inflation target and, over the weekend, said he would consider having the BoJ underwrite construction bonds. However, analysts expect the BoJ to hold fire on Tuesday, in order to take stock and monitor the influence of decisions already taken. More generally traders are unconvinced the BoJ can really break the hold of the risk-on, risk-off paradigm on the yen. China's renminbi remained at a multi-year low versus the dollar of Rmb6.2344, after China's central bank governor Zhou Xiaochuan said: "For the central bank, I think the next movement related to the yuan is going to be reform of convertibility."