Dollar near lowest level in eight months

Published: 3 Oct at 9 AM Tags: Euro, Dollar,

The government shutdown in the US is weighing heavy on the dollar, which is currently hovering around its lowest level in eight months. Conversely the euro is doing well as the political situation in Italy seems to have sorted itself out and the European Central Bank remains committed to doing everything in its power to protect Europe’s economy.

The single currency is currently trading at $1.3581, close to this year’s high of $1.3711. This has helped push the dollar down to an eight-month trough. The greenback is also close to a five-week low against the yen at 97.14. The euro is also slightly down against the Japanese currency at 132.37 after coming off a 131.39 low.

If the US federal government shutdown is broken, many investors believe the dollar will make a speedy recovery. A meeting in Congress of Democratic and Republican leaders yesterday ended in stalemate.

The biggest mover at the moment is the New Zealand dollar. News that the Reserve Bank will look at increasing interest rates if mortgage lending limits fail to calm down the housing market pushed the Kiwi to a high of $0.8340.

This is well above yesterday’s two-week low of $0.8194. Investors are now watching China carefully after disappointing manufacturing figures suggest that the world’s second-largest economy could be on the slowdown.