The USD was able to firm against most world currencies Friday, even as the U.S. government shutdown entered its fourth day. There was some encouraging news indicating that an agreement was close to being made between lawmakers that could end the shutdown early next week,
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The USD was able to firm against most world currencies Friday, even as the U.S. government shutdown entered its fourth day. There was some encouraging news indicating that an agreement was close to being made between lawmakers that could end the shutdown early next week, which was encouraging to currency traders. The USD firmed solidly against both the Euro and the Pound. Against the Yen, the USD was unchanged for most of the day, but began to edge higher near the close of trading.
The Euro saw mixed trading action Friday as it softened against the Yen and the U.S. dollar, but firmed against the Pound. The EUR/GBP rise was mostly due to technical pressure, as traders were beginning to view the strong Pound as overextended and technical profit taking ensued. The Euro did get some relief in the form of easing political tensions in Italy, but the Euro region is still struggling with weak inflation, poor credit creation, and overall low growth.
The Pound fell against world currencies on Friday as traders took profits from the currency, which is becoming view as overbought after its recent gains. There were also some mixed economic data that helped to put pressure on the Pound, as investors increasingly have high expectations for the recovery in the U.K.
The Yen continued to firm against world currencies Friday, with healthy gains against both the Euro and the Pound. Against the more widely watched USD cross, the Yen was unchanged for most of the day, but began to retreat late in the trading session. As long as the political circus continues in the U.S., we can expect the Yen to remain strong as investors use it as a safe haven currency to distance themselves from the risks seen in Western currencies.
Markets were largely immune to the continuing U.S. shutdown on Friday, though there were some concerns from Asian traders, where markets retreated slightly Friday in caution ahead of the weekend. European markets also began the day to the downside on concerns over the shutdown, but some positive news later in the day regarding a potential end to the budget impasse allowed European markets to recover and end the session to the upside. U.S. markets opened unchanged and spent the day climbing steadily higher as they attempted to erase the losses from earlier in the week. The S&P 500 did not quite make it though, as it gained 0.89% for the day, but was still off by 0.1% for the week. The Dow fared even worse, with a 1.2% loss for the week, while the Nasdaq gained 0.7% for the week as technology stocks continue to lead the markets.
Crude prices moved higher Friday as a potential hurricane was developing in the Gulf of Mexico, threatening to disrupt oil supplies from the platforms and refineries of the Gulf area. By the close of trading, November crude was up by $0.53, or 0.5%, to finish at $103.84 a barrel.
Despite the uncertainties created by the shutdown of the U.S. government, gold did not behave as much of a safe haven during the week as it fell on a weekly basis. December gold was down by $29.30 for the week, or 2.2%, to end the session Friday at $1,309.90 an ounce. Analysts expect gold to begin appreciating more on safe haven demand as the budget impasse drags on and as the U.S. nears the debt ceiling deadline of October 17th without a resolution to that issue.
Crude – Expect crude prices to retreat significantly as traders return from the weekend and learn that tropical storm Karen has died off and there will be no disruptions to oil production in the Gulf of Mexico. The possibility of such supply disruptions sent crude higher Friday, but with the threat gone, there is very little news out there that is conducive to higher oil prices right now.
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