Dollar Weakens Broadly On US Government Shutdown Fears

Market Review - 25/09/2013 22:19GMT

Dollar weakens broadly on U.S. government shutdown fears

The dollar weakened across the board on Wednesday, weighed down by worries about gridlock in Washington on the U.S. budget that could lead to a government shutdown next week.

Although the single currency briefly retreated to 1.3462 in Asian morning, euro rallied to 1.3520 in European morning on dollar's weakness. Later, despite a pullback to 1.3494 in New York morning, renewed buying lifted the pair and price rose to session high at 1.3538 at New York midday before easing.

The British pound dropped to session low at 1.5980 in Asian morning, however, dollar's broad-based weakness lifted the pair and cable rallied in European morning, helped by the release of better-than-expected U.K. CBI distributive trades and eventually hit an intra-day high at 1.6088 in New York session before trading sideways. U.K. CBI distributive trades (Sep) came in at 34, better than the forecast of 23.

Versus the Japanese yen, the greenback remained under pressure in Asia and weakened to an intra-day low at 98.38 in European morning on concerns over U.S. budget negotiations. Dollar later pared intra-day losses on renewed cross-selling of yen and staged a recovery to 98.82 in New York morning before falling near New York close.

In other news, ECB's Asmussen said 'ESM treaty will have to change before it can be used for bank recapitalization.'

On the data front, U.S. durable goods (Aug) came in at 0.1%, versus the forecast of 0.0%, previous reading was revised to -8.1%; U.S. durable goods ex. transport (Aug) came in at -0.1%, versus the forecast of 1.0%, previous reading was revised to -0.5%; U.S. ex. defense (Aug) came in at 0.5%, previous reading was revised to -7.5%. In a separate report, U.S. new home sales (Aug) came in at 0.421M and 7.9% m/m, better than the forecasts of 0.420M and 6.6% m/m respectively.

Data to be released on Thursday:

France consumer confidence, U.K. current account, GDP, U.S. GDP, PCE core, jobless claims, personal consumption and pending home sales.