Investing.com - The dollar was mostly lower against the other major currencies on Thursday, as the government shutdown in the U.S. and the added concerns over the outlook for growth in the world's biggest economy continued to dominate market sentiment.
During European morning trade, the dollar rose against the yen, with USD/JPY climbing 0.47% to 97.80.
The dollar remained under pressure as a U.S. government shutdown entered a third day with no signs of a resolution to an impasse over federal funding. Investors were fearful that the shutdown would curb the economic recovery and prompt the Federal Reserve to maintain its stimulus program for longer.
Last month the U.S. central bank took markets by surprise with a decision to keep its stimulus program on track, saying it wanted to see more evidence of a sustained economic recovery before tapering.
President Barack Obama met with Republican and Democratic leaders in Congress on Wednesday, although a solution still seemed unlikely.
Markets were also mulling over how the political deadlock in Washington will impact on negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by October 17.
The euro was hovering near eight-month highs against the dollar, with EUR/USD adding 0.22% to 1.3610.
Official data showed that retail sales in the euro zone rose 0.7% in August, beating expectations for a 0.2% gain, after an upwardly revised 0.5% increase the previous month.
Earlier Thursday, Markit research group said its final reading for the euro zone services purchasing managers' index rose to 52.2 in September, from a reading of 52.1 in August. Analysts had expected the index to remain unchanged last month.
Germany's services PMI declined to 53.7 last month, from a reading of 54.4 in August, compared to expectations for the index to remain unchanged.
The euro remained supported after Italian Prime Minister Enrico Letta survived a vote of confidence in parliament on Wednesday, after Silvio Berlusconi dropped his opposition to the coalition.
In addition, European Central Bank President Mario Draghi reiterated that bank rates would remain at current or lower levels for an “extended period of time”, given the subdued inflation outlook and low levels of growth in the region.
The dollar was trading close to nine-month lows against the pound, with GBP/USD up 0.03% to 1.6229.
Markit said the U.K. services PMI ticked down to 60.3 in September, from a reading of 60.5 the previous month, compared to expectations for a decline to 60.0.
A separate report showed that house price inflation in the U.K. rose 0.3% last month, confounding expectations for a 0.5% increase, after a downwardly revised 0.3% uptick in August.
The dollar edged lower against the Swiss franc, with USD/CHF slipping 0.14% to 0.9014.
Elsewhere, the greenback was steady to higher against its Australian, New Zealand and Canadian counterparts, with AUD/USD up 0.05% to 0.9391, NZD/USD shedding 0.29% to trade at 0.8304 and USD/CAD inching 0.03% lower to 1.0334.
The export-related currencies found some support after a government report showed that China's non-manufacturing PMI climbed to a six-month high of 55.4 in September from 53.9 in August.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.09% to 79.92.
During European morning trade, the dollar rose against the yen, with USD/JPY climbing 0.47% to 97.80.
The dollar remained under pressure as a U.S. government shutdown entered a third day with no signs of a resolution to an impasse over federal funding. Investors were fearful that the shutdown would curb the economic recovery and prompt the Federal Reserve to maintain its stimulus program for longer.
Last month the U.S. central bank took markets by surprise with a decision to keep its stimulus program on track, saying it wanted to see more evidence of a sustained economic recovery before tapering.
President Barack Obama met with Republican and Democratic leaders in Congress on Wednesday, although a solution still seemed unlikely.
Markets were also mulling over how the political deadlock in Washington will impact on negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by October 17.
The euro was hovering near eight-month highs against the dollar, with EUR/USD adding 0.22% to 1.3610.
Official data showed that retail sales in the euro zone rose 0.7% in August, beating expectations for a 0.2% gain, after an upwardly revised 0.5% increase the previous month.
Earlier Thursday, Markit research group said its final reading for the euro zone services purchasing managers' index rose to 52.2 in September, from a reading of 52.1 in August. Analysts had expected the index to remain unchanged last month.
Germany's services PMI declined to 53.7 last month, from a reading of 54.4 in August, compared to expectations for the index to remain unchanged.
The euro remained supported after Italian Prime Minister Enrico Letta survived a vote of confidence in parliament on Wednesday, after Silvio Berlusconi dropped his opposition to the coalition.
In addition, European Central Bank President Mario Draghi reiterated that bank rates would remain at current or lower levels for an “extended period of time”, given the subdued inflation outlook and low levels of growth in the region.
The dollar was trading close to nine-month lows against the pound, with GBP/USD up 0.03% to 1.6229.
Markit said the U.K. services PMI ticked down to 60.3 in September, from a reading of 60.5 the previous month, compared to expectations for a decline to 60.0.
A separate report showed that house price inflation in the U.K. rose 0.3% last month, confounding expectations for a 0.5% increase, after a downwardly revised 0.3% uptick in August.
The dollar edged lower against the Swiss franc, with USD/CHF slipping 0.14% to 0.9014.
Elsewhere, the greenback was steady to higher against its Australian, New Zealand and Canadian counterparts, with AUD/USD up 0.05% to 0.9391, NZD/USD shedding 0.29% to trade at 0.8304 and USD/CAD inching 0.03% lower to 1.0334.
The export-related currencies found some support after a government report showed that China's non-manufacturing PMI climbed to a six-month high of 55.4 in September from 53.9 in August.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.09% to 79.92.