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Forex - Dollar makes cautious gains amid demand from bargain hunters

Posted
10/4/2013 3:41:00 PM
By: Investing.com
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Investing.com - Bottom fishers snapped up nicely priced dollar positions on Friday amid sentiments that an ongoing U.S. government shutdown sent the greenback falling to attractively affordable levels.

In U.S. trading on Friday, EUR/USD was down 0.48% at 1.3553.

A U.S. government shutdown that began earlier this week due to congressional inability to agree on a spending package pushed the dollar down to levels ripe for bottom fishing on Friday.

The euro hit highs not seen since February earlier in recent sessions, further supporting views that the dollar was oversold in a session previously scheduled to see the release of the U.S. September jobs report.

The Bureau of Labor Statistics said on its web site that it was not collecting data, issuing reports, or responding to public inquiries due to suspension of federal services.

Markets were also mulling how the U.S. political 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.

International Monetary Fund head Christine Lagarde said earlier that failure to raise the U.S. debt ceiling could hurt the global economy and warned U.S. growth could drop below 2% this year.

Supporting the dollar, however, was a Standard & Poor's report stating that the debt ceiling debate is unlikely to change its U.S. sovereign rating.

Meanwhile in the euro zone, official data earlier showed that Germany's producer price index fell 0.1% in August, defying expectations for a 0.1% rise after a 0.1% slip the previous month.

The greenback up against the pound, with GBP/USD down 0.81% at 1.6025.

In the U.K. on Thursday the Markit research firm said its services purchasing manager's index ticked down to 60.3 in September from 60.5 in August, better than 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 tame data sparked a round of profit-taking that carried into Friday, as investors viewed the pound as due for a breather after hitting recent nine-month highs against the greenback.

The dollar was up against the yen, with USD/JPY up 0.15% at 97.41, and up against the Swiss franc, with USD/CHF up 0.87%at 0.9072.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.33% at 1.0298, AUD/USD up 0.36% at 0.9428 and NZD/USD trading up 0.36% at 0.8323.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.45% at 80.22.









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