Dollar Pays The Price of U.S. Shutdown and Other Top Forex News.
The U.S. dollar remained under pressure against most major currencies on Friday, as concerns over the consequences of the two-week U.S. government shutdown sparked concern that the Federal Reserve may not scale back its bond purchase program until early next year.
The possibility of another debt crisis also looms large, as the temporary debt ceiling agreement reached on Thursday does not completely resolve the underlying budgetary issues dividing Republicans and Democrats.
The current deal funds the government until January 15 and raises the government borrowing limit until February 7. Both sides have however, agreed to talks over broad budget issues in an attempt to reach a longer-term deal by December 13.
During the U.S. session, the dollar fell against the yen, with USD/JPY down 0.05% to 97.87.
The Japanese currency was further supported after Bank of Japan Governor Haruhiko Kuroda said that effects of the central bank’s monetary stimulus are firmly emerging on economic activity and that the positive impact is spreading in the economy and prices.
Meanwhile the euro rose to an 8-1/2 month high against a broadly weaker dollar due to concerns about the economic impact of the U.S. government shutdown.
EUR/USD closed up 0.03% to 1.3680.
Elsewhere, the Canadian dollar was steady after official data showed that Canadian core consumer price inflation remained unchanged at 1.3% in September, confounding expectations for a move down to 1%.
Consumer price inflation, including the eight most volatile items, rose to 0.2% last month, from a flat reading in August, compared to expectations for a rise to 0.1%.
USD/CAD climbed 0.02% to 1.0296.
In Australia, RBA Governor Glenn Stevens told a collection of journalists that good progress has been made, but there remains a lot of work to do be made to make sure that post-global financial crisis reforms are implemented.
The Aussie and Kiwi dollars found further support after official data showed that China’s gross domestic product grew by 7.8% in the third quarter, in line with expectations and up from 7.5% in the three months to June.
The data eased concerns over the strength of the recovery in the world’s second-largest economy.
Industrial production in China also rose by an annualized rate of 10.2% in September, exceeding expectations for a 10.1% increase, after a 10.4% rise the previous month.
AUD/USD climbed 0.33% to 0.9666 and NZD/USD edged up 0.05% to close at 0.8490.
More coverage of today’s session.
- Trading Room: U.S. dollar suffers from debt debacle. – The US debt stand-off has shaken confidence in Washington’s fiscal management and in the US dollar as a reliable global currency, but, say analysts in Asia, there is no credible alternative to the greenback.
- FT: China growth cheers markets. – Accelerating economic growth in China coupled with continued relief that the US stepped back from default and continuing central bank largesse are helping push global stocks to a fresh five-year high.
More Top Stories:
FT: U.S. debt drama haunts ‘risk free’ assets. – While Washington prevented the October 17 US debt ceiling deadline leading to catastrophic payment glitches, the uncertainty caused by the political showdown has raised fears about the country’s growth prospects and its global economic influence.
Trading Floor: All has gone wrong for the USD bulls, for now. – Well the USD has no friends and no love for it either at the moment it seems. Temporary. Pot calling the kettle black? Biggest USD bear for months now changing his tune? No and smalls (like tiny) and in fact just reverting to a neutral stance in truth. Are they enough disclaimers on the off chance I could be wrong? Yeah think so.
WSJ: Canadian dollar little changed after Sept CPI release. – The Canadian dollar was little changed against the U.S. dollar early Friday following a reading on Canada’s consumer price index for September that came mostly in line with expectations.
WSJ: Australian dollar supported despite central bank remarks. – The Australian dollar remained well supported Friday, trading close to its highest level in four months despite comments by the central bank that it is too high.
WSJ: New Zealand dollar higher but profit-taking reclaims some gains. – New Zealand–The New Zealand dollar was trading higher late on Friday against the U.S. dollar but pared some overnight gains on profit taking.
Investing.com: EUR/USD remains near 7-1/2 month highs in subdued trade. – The euro remained near seven-and-a-half month highs against the U.S. dollar in subdued trade on Friday, as speculation the Federal Reserve could hold back from tapering its stimulus program continued to dampen demand for the greenback.
Investing.com: Pound holds gains against broadly weaker dollar. – The pound held gains against the U.S. dollar in light trade on Friday, as the greenback remained under pressure amid sustained concerns over the economic effects of the recent U.S. government shutdown.
Investing.com: Gold futures slide lower but remain supported, U.S. still in focus. – Gold futures remained near more than one week highs on the back of a broadly weaker dollar on Thursday, as news of a last minute deal to avoid a U.S. default was overshadowed by concerns about the economic impact of the two-week government shutdown.