News / Economy

    US Dollar Bounces From 8-Month Low, Shutdown Limits Upside

    Businessmen are reflected on a board showing the U.S. NASDAQ average outside a brokerage in Tokyo, Oct. 1, 2013.
    Businessmen are reflected on a board showing the U.S. NASDAQ average outside a brokerage in Tokyo, Oct. 1, 2013.
    Reuters
    The dollar rose against a basket of major currencies on Friday after five straight sessions of losses but remained within striking distance of an eight-month low hit the previous day, as the U.S. government closure continued.
     
    The shutdown of the U.S. government appeared likely to drag on for another week and possibly longer as lawmakers consumed day three of the shutdown on Thursday with a stalling game, and with no end in sight until the next crisis hits Washington around Oct. 17.
     
    October 17 is the date Congress must raise the nation's borrowing authority or risk default, and members of Congress now expect it to be the flashpoint for a larger clash over the U.S. budget as well as President Barack Obama's healthcare law.
     
    The U.S. dollar index, which tracks the greenback against six major currencies, last traded up 0.3 percent at 79.994, but not far from Thursday's eight-month low of 79.627. The euro, which traded weaker, dominates the composition of the index.
     
    The greenback's gains were pronounced against the Swiss franc, rebounding from a 1-1/2 year low reached the previous day. The Swissie was weighed by news that Switzerland's financial markets regulator is investigating several Swiss banks in connection with the possible manipulation of foreign exchange rates.
     
    “So far markets have mostly treated [the government shutdown] as a U.S.-centric growth shock from fiscal/confidence effects, rather than as a tail-risk shock to market risk,” said Dan Dorrow, foreign exchange strategist at Faros Trading.
     
    “The present state of things is emerging market risk-positive as it keeps hyper-accommodative Federal Reserve  stimulating flows into emerging markets,” he said.
     
    The euro fell 0.3 percent to $1.3584, but not far from a peak of $1.3645 reached on Thursday, which marked its highest since February. It has risen nearly 0.5 percent on the dollar so far this week.
     
    Analysts predicted minor setbacks and some consolidation for the euro going into the weekend after its recent ascent. Real money accounts were cited as main sellers of the pair taking it below the $1.3600 mark.
     
    “No one wants to touch the dollar while we have uncertainties regarding the U.S. government shutdown. We also had a disappointing service sector number and that also added to the negative dollar sentiment,” said Niels Christensen, FX strategist at Nordea.
     
    The government shutdown has led the U.S. Labor Department to delay the employment report for September, which was scheduled for Friday. No new date was set for the release of the data.
     
    Thus, any confirmation of an improving labor market that the Federal Reserve wants to see before cutting its stimulus will likely be delayed, hurting the dollar. Two senior Fed officials said monetary policy was being kept easier to help offset the harm caused by political fighting.
     
    “Those who have been expecting [Fed tapering] in October should be having a bit of panic now. Those who have bet on December may be worried too,” said Katsunori Kitakura, associate manager of market making at Sumitomo Mitsui Trust Bank.
     
    Meanwhile, the resolution of Italy's latest political crisis, the European Central Bank refraining from any immediate policy action to help the economy, and this week's data all supported the euro this week.
     
    But Sara Yates, global currency strategist at JPMorgan Private Bank said the prospect of the Fed eventually trimming its bond purchase program could push benchmark U.S. 10-year Treasury yields to 3.0 percent or higher next year and support the dollar.
     
    At the same time “sentiment towards Europe will likely improve but the ECB will stand ready to ease policy to stop financial conditions from tightening too much,” she said, adding in such a case the euro could target the $1.28 mark.
     
    The dollar was down 0.1 percent against the yen at 97.14 yen after the Bank of Japan kept rates on hold as was widely expected.

    You May Like

    Video Democrats Clinton, Kaine Offer 'Very Different Vision' Than Trump

    In a jab at Trump, Clinton says her team wants to 'build bridges, not walls'; Obama Hails Kaine's record; Trump calls Kaine a 'job-killer'

    Turkey Wants Pakistan to Close Down institutions, Businesses Linked to Gulen

    Thousands of Pakistani students are enrolled in Gulen's commercial network of around two dozen institutions operating in Pakistan for over two decades

    AU Passport A Work in Progress

    Who will get the passport and what the benefits are still need to be worked out

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movementi
    X
    July 22, 2016 11:49 AM
    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Poor Residents in Cleveland Not Feeling High Hopes of Republican Convention

    With the Republican Party's National Convention underway in Cleveland, Ohio, delegates and visitors are gathered in the host city's downtown - waiting to hear from the party's presidential candidate, Donald Trump. But a few kilometers from the convention's venue, Cleveland's poorest residents are not convinced Trump or his policies will make a difference in their lives. VOA's Ramon Taylor spoke with some of these residents as well as some of the Republican delegates and filed this report.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video With Yosemite as Backdrop, Obama Praises National Parks

    Last month, President Barack Obama and his family visited some of the most beautiful national parks in the U.S. Using the majestic backdrop of a towering waterfall in California's Yosemite National Park, Obama praised the national park system which celebrates its 100th anniversary this year. He talked about the importance of America’s “national treasures” and the need to protect them from climate change and other threats. VOA’s Julie Taboh reports.
    Video

    Video Counter-Islamic State Coalition Plots Next Steps

    As momentum shifts against Islamic State in Iraq, discussions are taking place about the next steps for driving the terrorist group from its final strongholds. Secretary of State John Kerry is hosting a counter-IS meeting at the State Department, a day after defense ministers from more than 30 countries reviewed and agreed upon a course of action. VOA Pentagon correspondent Carla Babb reports.
    Video

    Video Russia's Participation at Brazil Olympic Games Still In Question

    The International Olympic Committee has delayed a decision on whether to ban all Russian teams from competing in next month's Olympic Games in Brazil over allegations of an elaborate doping scheme. The World Anti-Doping Agency recently released an independent report alleging widespread doping by Russian athletes at the 2014 Winter Olympics in Sochi. So far, only Russian track and field athletes have been barred from the Summer Games in Brazil. VOA's Zlatica Hoke has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.
    Video

    Video Millennials Could Determine Who Wins Race to White House

    With only four months to go until Americans elect a new president, one group of voters is getting a lot more attention these days: those ages 18 to 35, a generation known as millennials. It’s a demographic that some analysts say could have the power to decide the 2016 election. But a lot depends on whether they actually turn out to vote. VOA’s Alexa Lamanna reports.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9079
    JPY
    USD
    106.10
    GBP
    USD
    0.7636
    CAD
    USD
    1.3106
    INR
    USD
    67.076

    Rates may not be current.