Dollar higher after Obama, GOP tax deal

NEW YORK (AP) — The dollar kept gaining against yen and edged higher versus the euro today in the aftermath of a tax package that, if passed, could boost the U.S. economy.

Republican leaders and the White House have made a deal extending tax cuts on all income groups for two years and extending unemployment benefits. The deal includes a new payroll tax cut for employees and a credit for businesses.

The dollar rose as investors sold Treasury bonds, driving up yields on government debt. Rising yields on U.S. bonds make the dollar, which investors use to buy bonds, a more attractive bet for traders.

Investors tend to sell bonds and buy stocks when they feel that a growing economy will cause inflation to ramp up. They also sell bonds because of worries about a growing deficit. The tax deal would add to the deficit.