U.S. government battles to halt dollar worst run since 2015
I am a reporter for Businessamlive. Email: andy.nssien@businessamlive.com
Follow Andy
Fears of a possible U.S. government shutdown was having a telling effect on the dollar which on Friday stayed at 0.3 percent at 90.243, just off the previous day’s low of 90.113. It has lost about 2 percent so far in 2018.
As the U.S. currency dipped to its lowest since December 2014 this week, investors moved to sell hoping that other central banks will join the Federal Reserve in looking to raise ultra-low interest rates adopted to combat the 2008 global financial crisis and subsequent recessions.
According to Reuters, the U.S. House of Representatives passed a bill Thursday to fund government operations through to Feb. 16 and avoid agency shutdowns this weekend when existing allocations expire.
However, the bill is yet to get approval by the Senate, where it faces an uncertain future.
“Odds of a U.S. government shutdown have risen sharply in the past 24 hours,” said ING currency strategist Viraj Patel.
“While we would expect such noise to keep the dollar on the back foot, any fundamental fallout at this stage would seem premature – not least as history tends to show that some sort of conciliatory approach to keep the government functioning in the long-run will ultimately prevail within Congress.”
The prospect of Senate approval has been complicated by President Donald Trump saying that an extension of funding for the children’s health insurance programme, a Democratic priority, should not be included.
The euro edged up 0.3 percent to $1.2276, near a three-year high of $1.2323 struck on Wednesday. Having advanced more than half a percent this week, the common currency could post a fifth consecutive week of gains.
The dollar slipped by half a percent to 110.60 yen, with its rebound from Wednesday’s four-month low of 110.19 already fading despite a rise in U.S. debt yields.