Stock Market Watch

Forex Market Update: Dollar Index Falls Sharply

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The dollar index fell sharply on Friday as concerns over policy stalemate on debt-ceiling issue in Washington continued to weigh on the sentiment with risker assets coming under pressure.

The dollar index, a measure on U.S. unit’s performance against a basket of six major currencies, fell 0.43% to 80.19

The WSJ$ Index, whose indexing criteria is slightly broader, edged down 0.38% to 72.70.

Against the yen, the dollar fell 0.69% to trade at yen98.31. The Japanese currency received support after Japan’s finance minister; Taro Aso said that the government was not considering slashing the corporate tax rate. Earlier on Thursday, Japanese daily reported that the government was considering lowering corporate tax rate in order to offset potential negative impact arising due to hike in consumption tax.

Although market participants expect the lawmakers to reach some kind of agreement over raising treasury’s borrowing limit in order to prevent possible partial U.S. government shutdown and potential debt default , political brinkmanship is delaying any early resolution over the issue, keeping investors edgy.

“Everyone instinctively wants to believe a last minute compromise is likely, but the political brinkmanship does raise the prospect that they will crash the car,” said Ned Rumpeltin, head of G10 FX Strategy at Standard Chartered Bank, according to Reuters.

Meanwhile, investors are keeping a close eye on U.S. economic data. A fresh set of data might provide some clue over whether the Federal Reserve might stick to its bond purchase program or start scaling it down before the year end. Only two open market committee meetings (FOMC) are now scheduled before the end of the year.








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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.

Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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