US Session – Dollar weak as markets wait for end of US government shutdown
October 1, 2013 7:51 pm
The dollar was little changed in the US session on Tuesday, remaining weak as a result of the US partial government shutdown which began today after the US Congress was unable to reach an agreement on a spending bill before the Monday deadline. Also causing concern is the upcoming October 17 deadline to raise the debt ceiling to avert a default by the US.
Investors are in a wait-and-see-mode now as they are uncertain how long the shutdown will last. A prolonged shutdown would curb the economic recovery and prompt the Federal Reserve to maintain its stimulus program for longer, which would be dollar-negative.
When markets are nervous, they tend to rush to safer assets, like the Japanese yen. USDJPY fell to an intra-day low of 97.64 and after a slight bounce after US data it gravitated towards this low in the US session. A rise in US manufacturing PMI today helped limit the dollar’s decline.
Data from the US Institute for Supply Management showed that its manufacturing PMI rose to 56.2 in September from 55.7 in August.
The euro hit the highest level in seven months against the dollar on Tuesday, hitting an intraday high of $1.3587. EURUSD ended the day flat at around $1.3525. Weighing on the euro were some weak data on German employment and Euro zone growth.
Sterling briefly dipped lower after data showed that UK manufacturing activity slowed slightly in September. However the broadly weaker dollar and also a euro under pressure made the British pound the next best currency to invest in.
GBPUSD hit an intraday high of $1.6259 before easing slightly to find support around $1.6190 through the US session.
Due to the US government shutdown it is highly unlikely that the nonfarm payrolls data will be released as scheduled on Friday.
The dollar was little changed in the US session on Tuesday, remaining weak as a result of the US partial government shutdown which began today after the US Congress was unable to reach an agreement on a spending bill before the Monday deadline. Also causing concern is the upcoming October 17 deadline to raise the debt ceiling to avert a default by the US.
Investors are in a wait-and-see-mode now as they are uncertain how long the shutdown will last. A prolonged shutdown would curb the economic recovery and prompt the Federal Reserve to maintain its stimulus program for longer, which would be dollar-negative.
When markets are nervous, they tend to rush to safer assets, like the Japanese yen. USDJPY fell to an intra-day low of 97.64 and after a slight bounce after US data it gravitated towards this low in the US session. A rise in US manufacturing PMI today helped limit the dollar’s decline.
Data from the US Institute for Supply Management showed that its manufacturing PMI rose to 56.2 in September from 55.7 in August.
The euro hit the highest level in seven months against the dollar on Tuesday, hitting an intraday high of $1.3587. EURUSD ended the day flat at around $1.3525. Weighing on the euro were some weak data on German employment and Euro zone growth.
Sterling briefly dipped lower after data showed that UK manufacturing activity slowed slightly in September. However the broadly weaker dollar and also a euro under pressure made the British pound the next best currency to invest in.
GBPUSD hit an intraday high of $1.6259 before easing slightly to find support around $1.6190 through the US session.
Due to the US government shutdown it is highly unlikely that the nonfarm payrolls data will be released as scheduled on Friday.
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