Dollar on the Back Foot

Dollar trades on the back foot on Friday on fears that the US government might ‘shut down‘ due to lack of consensus on the federal budget. What lies ahead for the buck?

As US policymakers failed to reach an agreement on the budget bill, the US dollar index (DXY) edged lower at 90.19 before 2:00 am ET (or 6:00 am GMT), approaching 3-year lows at 89.97.

US lawmakers fear that the global economic growth would prompt major central banks worldwide, including the ECB to start loosening up monetary policy more rapidly and thus outpacing the US economic growth. Will it or won’t it happen? Time and trade will show. For now, let us take a quick look at the charts.

Dollar Down

EURUSD pipped up on Friday morning, taking advantage of a weak dollar. The pair has seen a high open at 1.22722 and has added a few more pips since morning, approaching 1.2280.

Following a disappointing release of UK retail sales data, which reflected a contraction of 1.5% m-o-m in December, GBPUSD slipped to 1.3900. As of writing, the pair started going slowly up to 1.39122.

Meanwhile, the yearly rate worsened consensus, showing only a modest increase of 1.4% compared to 3.0% expected.

The dollar also posed a weaker stance against the Japanese yen and Swiss franc. USDJPY had an open of 110.682. Despite the slight slip to 110.573, the pair’s trading is likely to gain pace on news that Japan’s government is about to raise the economic assessment for the first time since June 2017. The country’s economy is seen to recover at a moderate pace.

USDCHF started the day at 0.95571 (open), while AUDUSD edged higher at 0.95571 (open).

NZDUSD has hardly seen any movement on Friday, steadying around 0.73001.

What about USDCAD? Finally, Loonie-buck trades at 1.24120, steady with little to no shattering movement.