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Forex Market Update: Dollar Index Down, Uncertainty over Fiscal policy Weighs on The Dollar

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The dollar index and global   equities fell while safe-haven assets such as gold edged up as continued policy stalemate in Washington over debt ceiling issue kept investors risk-averse.

The dollar Index, a measure on U.S. unit’s performance against a basket of six major currencies, fell 0.14% to 80.48.

Against the euro, the dollar was down 0.23%, trading at $1.3505. The euro was also supported by a strong German consumer confidence index. The Index climbed to its six-year high.

On Wednesday, the Senate is likely to turn down a measure that would allow the government an access to funds until the month end, but would to some extent defund “Obamacare”. If the impasse is not solved then it could result in partial shutdown of the government.

Another factor which is weighing on the U.S. dollar is an uncertainty over when the Federal Reserve might start tapering of its bond purchase program. The Fed last Wednesday staggered global investors by not scaling down the pace of economic stimulating measures. Since then, several policymakers have provided mixed signals over what the Fed might do in coming FOMC. While New York Fed President William Dudley gave very dovish remarks, Dallas Fed President Richard Fisher was not happy with current easy-money policy.

“We’re not seeing a post-Fed party as perhaps the market was initially expecting, and that’s causing some safe-haven flows,” said Simon Smith, chief economist at FXPro, according to Reuters.

 








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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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