LONDON: The dollar slipped against the yen in a quiet market on Wednesday, with appetite for risk muted as concerns about a possible US government shutdown offset optimism about progress on tax reform legislation.
Analysts said it was unlikely there would be any big moves in the dollar before Friday’s closely watched non-farm payrolls report and perhaps not until next week’s US Federal Reserve policy meeting.
Moves in Bitcoin dwarfed those in regular currencies again, with the cryptocurrency hitting a new record high of more than $12,800, up almost 10 percent on the day. It is on track for its strongest quarter since 2013 after almost tripling in price since the start of October.
The dollar hit a five-day low of 111.99 yen, down half a percent on the day, with the Japanese currency displaying its standard relationship with the country’s stock market: When it falls, the yen gains.
European stocks were lower too. “This is a typical risk-off move,” said BMO Capital Markets currency strategist Stephen Gallo, in London. “The yen crosses have been a drag all morning, and I think that’s fed through into euro/dollar, with a weaker euro/yen dragging down the euro against the dollar too.” The euro edged down 0.1 percent to $1.1815.
The dollar index, which tracks the greenback against a basket of six major currencies, was flat at 93.297. The United States’ Republican-controlled House of Representatives voted on Monday to go to conference with the Senate to begin formal negotiations on a tax reform bill, with the Senate expected to hold a similar conference vote later this week – a development seen as positive by markets.
But in the meantime, the possibility of a US government shutdown looms, if lawmakers fail to reach a budget accord this week. Government funding is set to expire on Friday. “As we know, in general they (US Congress) find a solution, even if it’s a last-day solution,” said Commerzbank currency strategist Esther Reichelt. “But … in general, political turmoil is an underlying weight on the dollar and it’s one of the reasons the euro is above the $1.18 level at the moment.”
Published in Daily Times, December 7th 2017.
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