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

On Everest, Helicopters Rescue Stranded Climbers

Choppers transport some of more than 100 mountaineers trapped after deadly quake, avalanches More

Video Ten Years After Riots, France Searches for Answers to Neglected Suburbs

In 2005, a Paris suburb exploded into violence after two teenagers were electrocuted as they hid from police; since then, somethings have changed, others not More

US, Japan Announce Historic Revision of Defense Cooperation Guidelines

Nations say new guidelines will be 'cornerstone for peace and security' in Asia-Pacific region while also serving as 'platform for a more stable international security environment' More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
‘Angel of the Migrants’ Helps Desperate Syrians Arriving in Europei
X
Henry Ridgwell
April 26, 2015 10:36 PM
Waves of migrants are continuing to arrive on the shores of southern Italy from North Africa. After their dangerous journey across the Mediterranean, they face an unknown future in Europe. In the Sicilian city of Catania there is an activist dedicated to helping the refugees on their journey.
Video

Video ‘Angel of the Migrants’ Helps Desperate Syrians Arriving in Europe

Waves of migrants are continuing to arrive on the shores of southern Italy from North Africa. After their dangerous journey across the Mediterranean, they face an unknown future in Europe. In the Sicilian city of Catania there is an activist dedicated to helping the refugees on their journey.
Video

Video Ten Years After Riots, France Searches for Answers to Neglected Suburbs

January’s terrorist attacks and fears of more to come are casting a spotlight on France’s neglected suburbs. Home to many immigrants, and sometimes hubs of crime, they were rocked by rioting a decade ago. Lisa Bryant visited the Paris suburb of Clichy-sous-Bois, where the 2005 violence first broke out, and has this report about what has changed and what has not.
Video

Video Gay Marriage Goes Before US Supreme Court

This week, the U.S. Supreme Court will hear arguments on whether gay people have a constitutional right to marriage. VOA’s Michael Bowman reports, the case could lead to the nationwide legalization of same-sex marriage, or a continuation of the status quo in which individual states decide whether to recognize gay unions.
Video

Video Study: Insecticide Damaging Wild Bee Populations

A popular but controversial type of insecticide is damaging important wild bee populations, according to a new study. VOA’s Steve Baragona has more.
Video

Video Data Servers Could Heat Private Homes

As every computer owner knows, when their machines run a complex program they get pretty hot. In fact, cooling the processors can be expensive, especially when you're dealing with huge banks of computer servers. But what if that energy could heat private homes? VOA’s George Putic reports that a Dutch energy firm aims to do just that.
Video

Video Cinema That Crosses Borders Showcased at Tribeca Film Festival

Among the nearly 100 feature length films being shown at this year’s Tribeca Film Festival in New York City are more than 20 documentaries and features with international appeal, from a film about a Congolese businessman in China, to documentaries shot in Pakistan and diaspora communities in the U.S., to a poetic look at disaffected South African youth. VOA’s Carolyn Weaver has more.
Video

Video UN Confronts Threat of Young Radicals

The radicalization and recruitment of young people into Islamist extremist groups has become a growing challenge for governments worldwide. On Thursday, the U.N. Security Council heard from experts on the issue, which has become a potent threat to international peace and security. VOA’s Margaret Besheer reports.
Video

Video Growing Numbers of Turks Discover Armenian Ancestry

In a climate of improved tolerance, growing numbers of people in Turkey are discovering their grandmothers were Armenian. Hundreds of thousands of Armenians escaped the mass deportations and slaughter of the early 1900's by forced conversion to Islam. Or, Armenian children were taken in by Turkish families and assimilated. Now their stories are increasingly being heard. Dorian Jones reports from Istanbul that the revelations are viewed as an important step.
Video

Video Migrants Trek Through Western Balkans to Reach EU

Migrants from Africa and other places are finding different routes into the European Union in search of a better life. The Associated Press followed one clandestine group to document their trek through the western Balkans to Hungary. Zlatica Hoke reports that the migrants started using that route about four years ago. Since then, it has become the second-most popular path into Western Europe, after the option of sailing from North Africa to Italy.
Video

Video US Businesses See Cuba as New Frontier

The Obama administration's opening toward Cuba is giving U.S. companies hope they'll be able to do business in Cuba despite the continuation of the U.S. economic embargo against the communist nation. Some American companies have been able to export some products to Cuba, but the recent lifting of Cuba's terrorism designation could relax other restrictions. As VOA's Daniela Schrier reports, corporate heavy hitters are lining up to head across the Florida Straits - though experts urge caution.
Video

Video Kenya Launches Police Recruitment Drive After Terror Attacks

Kenya launched a major police recruitment drive this week as part of a large-scale effort to boost security following a recent spate of terror attacks. VOA’s Gabe Joselow reports that allegations of corruption in the process are raising old concerns about the integrity of Kenya’s security forces.
Video

Video Japan, China in Race for Asia High-Speed Rail Projects

A lucrative competition is underway in Asia for billions of dollars in high-speed rail projects. Cambodia, India, Indonesia, Malaysia Thailand and Vietnam are among the countries planning to move onto the fast track. They are negotiating with Japan and the upstart Chinese who are locked in a duel to revolutionize transportation across Asia. VOA Correspondent Steve Herman in Bangkok has details.
Video

Video Scientists: Mosquitoes Attracted By Our Genes

Some people always seem to get bitten by mosquitoes more than others. Now, scientists have proved that is really the case - and they say it’s all because of genes. It’s hoped the research might lead to new preventative treatments for diseases like malaria, as Henry Ridgwell reports from London.
Video

Video Bible Museum Coming to Washington DC

Washington is the center of American political power and also home to some of the nation’s most visited museums. A new one that will showcase the Bible has skeptics questioning the motives of its conservative Christian funders. VOA religion correspondent Jerome Socolovsky reports.
Video

Video Afghan First Lady Pledges No Roll Back on Women's Rights

Afghan First Lady Rula Ghani, named one of Time's 100 Most Influential, says women should take part in talks with Taliban. VOA's Rokhsar Azamee has more from Kabul.

VOA Blogs

World Currencies

EUR
USD
0.9240
JPY
USD
119.41
GBP
USD
0.6618
CAD
USD
1.2155
INR
USD
63.567

Rates may not be current.