Published: 1 Oct at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, USA, Japan,
The partial shutdown of the US government and the potential drag on US GDP the situation may cause triggered significant market volatility overnight.
Now, with investors lowering the odds of the Federal Reserve tapering stimulus as a result of this political fallout the US Dollar has posted widespread declines against its peers.
Against the Euro, the â€˜Greenbackâ€™ slumped to an eight-month low, and the US asset consolidated its nine-month low against the Pound during local trading.
While the US Dollar advanced on the Yen briefly after the Japanese Prime Minister hiked sales tax, the USD/JPY pairing reversed gains as investors focused on the repercussions of the first US government shutdown for 17 years.
As industry expert Robert Sinche observed; â€˜The fact that the Fedâ€™s going to continue to expand its balance sheet and add to the US monetary base relative to the rest of the world would tend to the be a negative for the Dollar. You donâ€™t have a capital-flow story, you do have a relative-balance sheet story working against the Dollar.â€™
In other currency news, the Pound advanced on its peers as UK manufacturing expanded for a sixth month.
Sterling fluctuated against the Euro during a heavy European news, but ended the local session stronger ahead of tomorrowâ€™s UK construction PMI.
As currency strategist Gavin Friend commented; â€˜Manufacturing activity continues to accelerate but at a slower pace, which is good. Thereâ€™s an underlying bid to Sterling thatâ€™s coming from the negative impact on the Dollar from the US situation. There was a period when we started 2013, when people assumed that things were looking pretty bad for the UK, but since July the dataâ€™s turned around and things are looking better.â€™
Economists have forecast that the construction sector expanded to 59.5 in September from 59.1.
As it stands the Pound is trading against the US Dollar in the region of 1.6212.
As of Tuesday, 1st October 2013, the Pound Sterling currency rates mentioned within this news item were as follows:
GBP EUR exchange rate was 1.1976, GBP USD exchange rate was 1.6196, and GBP JPY exchange rate was 158.8092.