Dollar slump as US government shuts down, Aussie rallies
Date
10/1/2013 4:21:34 AM
(MENAFN– ecpulse)
The dollar slipped sharply in early European trade as the US government shutdown came into effect at the stroke of midnight. Investors shunned the dollar as the impact of the partial shutdown now will start to show on the fragile recovery forcing the Fed again to delay any tapering for now. The reaction remains muted somehow as investors still believe in a chance for a deal and focus more on a debt ceiling that is also believe to be averted, therefore, reality has yet to hit the market hard!
The dollar slid against its major trading partners, especially sterling and aussie as the Congress failed to reach a deal and the impasse on the budget. The dollar index traded briefly below 80.00 levels to strike a low of 79.86 and a breakout below 79.80 areas will extend bearishness for the USDIX 79.60-40 areas.
GBPUSD rallied with the softer dollar approaching the highest this year, trading around 1.6250 areas close to the highest set in January 2013. The upside bias remains favored for sterling with the breach of 1.6170 and consolidating above the mentioned 88.6% correction will extend the upside move targeting the previous top at 1.6340 to set a new high for the year.
AUDUSD also rallied sharply this morning, especially after positive data from Asia and the steady RBA decision. The tone was rather neutral from the Reserve Bank of Australia which dimmed some expectations for more easing to be seen anytime soon which further powered aussie higher.
Asian stocks also gained ahead of the shutdown after Japan’s Tankan survey rose more than expected as confidence among large manufacturers rose to pre-crisis levels in 2007 at 12 in September from 4 in June.
Aussie rallied versus the dollar to set the intraday high so far at 0.9423; stabilizing above 0.9400 will support the extension of the upside move eyeing 0.9525 areas. The upside bias is favored still and especially with trading above 0.9370 areas and as we said preferably to see consolidation above 0.9400 areas for now.
USDJPY is trading with downside bias as well around 97.95 off earlier high set at 98.72 areas. The bearishness is in play for the pair within the tight range, as failure to hold above 98.65 will keep the downside bias favored but to extend we need to see consolidation again below 98.00 levels to confirm the extension of the downside move. From the upside, holding above 98.65 will again push the pair to test the upper limit of the range.
As for the euro, the common currency also gained versus greenback pushing EURUSD as the pair holds above 1.3510-30 areas favoring the upside move. The pair so far set the high of 1.3587 but we favor a breakout above 1.36 areas to confirm further gains for the euro over the coming period.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.