Skip to main content

Dollar regains footing after US govt shutdown, higher yields support

The dollar’s index against a basket of six other major currencies initially dipped to hit 90.155 but was last up 0.1 percent at 90.665, managing to hold above the three-year trough of 90.113 set on Thursday.
The dollar regained some footing on Monday after slipping earlier on a US government shutdown, supported by higher Treasury yields, while investors took a relatively calm view of the Washington wrangling.
The US government shutdown took effect at midnight on Friday after Democrats and Republicans, locked in a bitter dispute over immigration and border security, failed to agree on a last-minute deal to fund government operations.
In order to break the impasse, Republican and Democratic leaders of the US Senate held talks on Sunday.
Senate Majority Leader Mitch McConnell said late on Sunday that an overnight vote on a measure to fund government operations through February 8 was cancelled and would instead be held at 12 pm (1700 GMT) on Monday.
“The market is accustomed with what is taking place in US politics. It is not reading too far into the shutdown, which is more like a political show,” said Koji Fukaya, president of FPG Securities in Tokyo.
The dollar’s index against a basket of six other major currencies initially dipped to hit 90.155 but was last up 0.1 percent at 90.665, managing to hold above the three-year trough of 90.113 set on Thursday.
The euro was a shade lower at $1.2221 after climbing to $1.2275 but failing to regain the three-year peak of $1.2323 that it scaled on Wednesday.
“The dollar’s losses have been limited as negotiations going into Friday were proving difficult and the market had time to price in a US government shutdown,” said Shin Kadota, senior strategist at Barclays in Tokyo.
“The shutdown is also not expected to last a very long time. That said, if the shutdown stretches out to several weeks, then we would have to start worrying about the negative impact on the US economy.”
The dollar pared its earlier losses and was little changed at 110.860 yen, still some distance from a four-month low of 110.190 plumbed on Wednesday. The greenback received some support from higher US yields.
The 10-year Treasury yield extended Friday’s rise and touched a 3-1/2-year high of 2.672 percent. The debt market had been on the defensive through much of last week in the wake of a rally in risk asset markets.
“A reverse correlation has been in place for a while between Treasury yields and the dollar, but there are signs that the disconnect between the two is finally beginning to reverse,” Fukaya at FPG Securities said.
The Australian dollar was little changed at $0.7989 and the New Zealand dollar was steady at $0.7277. The pound dipped 0.3 percent to $1.3862, pulling away from a 1-1/2-year top of $1.3942 reached on Wednesday following Friday’s disappointing UK retail sales data.
Before Friday’s fall sterling had gained against the dollar for seven straight sessions, with traders welcoming positive noises from the European Union about Brexit negotiations.



Comments

Post a Comment

Popular posts from this blog

As many as 12 killed in New York’s deadliest fire in decades

More than 160 firefighters helped bring the blaze under control. (Source: Fire Department New York/Twitter) A massive fire ignited accidentally by a three-year-old boy swept through a five-story apartment building in New York, killing at least 12 people including a toddler and injuring four others in the deadliest blaze to hit the city in decades. The fire broke out around 6:50 pm (local time) yesterday on the first floor of the Prospect Avenue apartment in the Bronx borough of the city and spread quickly, officials said, adding that the cause of the blaze is under investigation. “We found that this fire started in a kitchen on the first floor,” fire commissioner Daniel Nigro said. “It started from a young boy, three and a half years old, playing with the burners on the stove. The fire got started, the mother was not aware of it – she was alerted by the young man screaming.” The boy’s mother fled with her two children, leaving the door to the apartment open – allowing t...
Post a Comment
Read more

Ukraine crisis: Exchange of hundreds of prisoners takes place

Ukrainian President Petro Poroshenko attends a ceremony to welcome prisoners of war (POWs), released after the exchange with pro-Russian separatists, upon their arrival at an airport in Kharkiv, Ukraine December 27, 2017. (Source: Reuters)  Ukraine and separatist rebels in the east of the country have exchanged hundreds of prisoners, in one of the biggest swaps since the conflict began in 2014. Around 230 people were sent to rebel-held areas in return for 74 prisoners who had been held by pro-Russia rebels in the Donetsk and Luhansk regions, BBC reported on Wednesday. It was the first swap in 15 months. The release and exchange of prisoners was one of the points in the Minsk peace agreement, signed in 2015. The deal has stalled since and analysts say the swap does not signify wider progress. Both sides continue to hold other prisoners. The number of prisoners swapped was lower than initially announced after dozens of people who were meant to be returned to rebel-held terr...
Post a Comment
Read more

Nepal declares ban on solo, blind and double amputee climbers from Everest

This ban is likely to irk solo mountaineers, who enjoy the challenge of climbing alone. In a bid to prevent accidents, Nepal has banned solo climbers from climbing its mountains, including Mount Everest, reported news agency AFP. Earlier on Friday, the cabinet declared revised regulations of the Himalayan nation’s mountaineering, where banning solo climbers from scaling its mountains was one of the key measures being flagged ahead of the 2018 spring climbing season. The cabinet also declared a ban on double amputee and blind climbers, even though Everest has drawn multitudes of mountaineers wanting to overcome their disabilities and achieve the formidable feat. “The changes have barred solo expeditions, which were allowed before,” Maheshwor Neupane, secretary at the Ministry of Culture, Tourism and Civil Aviation, told AFP. Neupane added that the law was revised to make mountaineering safer and decrease deaths. Earlier in April this year, an experienced...
Post a Comment
Read more