US dollar stabilizes as budget impasse continues
The US dollar stabilized after falling below 80.0 against a basket of its major peers earlier in the week. As the US budget impasse enters its second week, all eyes will be on Washington to see if Democrats and Republicans can bridge the divide that threatens the nation’s recovery.
The International Monetary Fund remains optimistic a resolution can be reached before the October 17 deadline, when the US government will exhaust its borrowing authority. The IMF revised its growth forecast for the rest of this year and next, but also said a resolution to the government shutdown will be reached before next week’s deadline.
The US dollar stabilized around the 80.0 mark, advancing cautiously on mixed data. The EURUSD failed to generate any excitement, trading flat after soft factory orders from Germany. Orders declined 0.3 percent in August, according to the Bundesbank. Economists projected a monthly rise of 1.2 percent, according to Bloomberg. Elsewhere in Europe, the pound sterling failed to make headway against the dollar, with GBPUSD consolidating ahead of several batches of economic data Wednesday.
The US dollar advanced more than 0.3 percent against the yen after the Nikkei rallied on an upbeat Japanese Eco Watchers Survey. The survey is considered a basic indicator of assessing short-term economic trends in Japan.
The North American pair advanced 0.3 percent, edging closer to 1.0350, despite better-than-expected housing data from Canada. New housing starts reached 193.6K in the year ending in September, according to Statistics Canada, compared to 184K a month ago.
The ongoing political deadlock in Washington means key economic data from the United States government will continue to be delayed. The only report of interest Tuesday was the Business Optimism Index from the National Federation of Independent Business. The monthly reading of 93.9 was slightly lower than the previous month, as the ongoing political impasse weighed on small business owners.
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