Investing.com - The dollar inched up against most major currencies on Tuesday even as a government shutdown dragged on with no end in sight.
Hopes that lawmakers will at least find a way to raise the debt ceiling later this month and avoid default allowed for some dollar demand.
In U.S. trading on Tuesday, EUR/USD was down 0.07% at 1.3572.
Despite a government shutdown in its second week, markets grew a little less worried that the deadlock will affect negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by Oct. 17, after which the risk of default rises.
While the White House and congressional Republicans remain unable to agree on terms to fund the government, talk both sides are quietly making plans to raise the debt ceiling and avoid default sparked some relief demand for the dollar on Tuesday.
Earlier Tuesday, President Barack Obama said he saw no serious proposals from Republicans needed to end the impasse, which sent stocks falling though the dollar fared better.
The White House insists Republicans open the government before addressing fiscal issues, while many Republicans want the president's healthcare reform law scrapped or delayed before doing as such, with a stalemate resulting.
IMF Chief Economist Olivier Blanchard said earlier that a prolonged failure to raise the U.S. debt ceiling would "almost certainly derail the recovery" and warned the U.S. to slow the pace of its deficit reduction program.
In its latest World Economic Outlook report, the IMF downgraded its forecasts for the global economy, saying it now expects growth of 2.9% this year, down from 3.1% in July. It expects growth of 3.6% in 2014, down from 3.8%.
The euro, meanwhile, saw support after the IMF said it expected the euro zone economy to contract by 0.4% this year, less than 0.5% it forecast in July. It left its 2014 growth forecast unchanged at 1%.
Also Tuesday, data showed that German factory orders unexpectedly fell 0.3% in August following a 1.9% drop in July. Analysts had been expecting a gain of 1.2%.
The greenback was up against the pound, with GBP/USD down 0.07% at 1.6085.
Sterling found support after the IMF upgraded its economic outlook for the U.K. on Tuesday.
The Fund now expects the U.K. economy to expand by 1.4% this year, up from 0.9% and sees growth of 1.9% in 2014, up from its July forecast of 1.5%.
Profit taking erased the pounds gains.
The dollar was up against the yen, with USD/JPY up 0.31% at 97.01, and up against the Swiss franc, with USD/CHF up 0.14%at 0.9040.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.52% at 1.0366, AUD/USD up 0.08% at 0.9437 and NZD/USD trading down 0.08% at 0.8298.
The loonie softened after official data showed that the country’s trade deficit widened unexpectedly in August, expanding to CAD1.31 billion from a deficit of CAD1.19 billion in July. Analysts had expected the deficit to narrow to CAD1.0 billion.
A separate report showed that Canadian housing starts rose to 193,600 units last month from 184,000 units in August. Analysts had expected housing starts to increase to 185,000 units in September.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.09% at 80.09.
Hopes that lawmakers will at least find a way to raise the debt ceiling later this month and avoid default allowed for some dollar demand.
In U.S. trading on Tuesday, EUR/USD was down 0.07% at 1.3572.
Despite a government shutdown in its second week, markets grew a little less worried that the deadlock will affect negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by Oct. 17, after which the risk of default rises.
While the White House and congressional Republicans remain unable to agree on terms to fund the government, talk both sides are quietly making plans to raise the debt ceiling and avoid default sparked some relief demand for the dollar on Tuesday.
Earlier Tuesday, President Barack Obama said he saw no serious proposals from Republicans needed to end the impasse, which sent stocks falling though the dollar fared better.
The White House insists Republicans open the government before addressing fiscal issues, while many Republicans want the president's healthcare reform law scrapped or delayed before doing as such, with a stalemate resulting.
IMF Chief Economist Olivier Blanchard said earlier that a prolonged failure to raise the U.S. debt ceiling would "almost certainly derail the recovery" and warned the U.S. to slow the pace of its deficit reduction program.
In its latest World Economic Outlook report, the IMF downgraded its forecasts for the global economy, saying it now expects growth of 2.9% this year, down from 3.1% in July. It expects growth of 3.6% in 2014, down from 3.8%.
The euro, meanwhile, saw support after the IMF said it expected the euro zone economy to contract by 0.4% this year, less than 0.5% it forecast in July. It left its 2014 growth forecast unchanged at 1%.
Also Tuesday, data showed that German factory orders unexpectedly fell 0.3% in August following a 1.9% drop in July. Analysts had been expecting a gain of 1.2%.
The greenback was up against the pound, with GBP/USD down 0.07% at 1.6085.
Sterling found support after the IMF upgraded its economic outlook for the U.K. on Tuesday.
The Fund now expects the U.K. economy to expand by 1.4% this year, up from 0.9% and sees growth of 1.9% in 2014, up from its July forecast of 1.5%.
Profit taking erased the pounds gains.
The dollar was up against the yen, with USD/JPY up 0.31% at 97.01, and up against the Swiss franc, with USD/CHF up 0.14%at 0.9040.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.52% at 1.0366, AUD/USD up 0.08% at 0.9437 and NZD/USD trading down 0.08% at 0.8298.
The loonie softened after official data showed that the country’s trade deficit widened unexpectedly in August, expanding to CAD1.31 billion from a deficit of CAD1.19 billion in July. Analysts had expected the deficit to narrow to CAD1.0 billion.
A separate report showed that Canadian housing starts rose to 193,600 units last month from 184,000 units in August. Analysts had expected housing starts to increase to 185,000 units in September.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.09% at 80.09.