Dollar firmer as euro also pulls back

Published: 1 Oct at 9 AM Tags: Euro, Dollar,

The dollar index is up 0.1 per cent against a number of currencies. The greenback is a tad firmer as investors look to Washington and the possibility of a government shut down. If the borrowing authority of the federal government is not raised by the middle of this month there could be a debt default that would be felt around the globe.

Against its Japanese rival the dollar has gained 0.3 per cent to rise from Monday’s low of 97.48 yen to 98.53 yen. An expected hike in Japan’s national sales tax, as well as an economic stimulus package to be launched by Prime Minister Shinzo Abe, have kept pressure on the yen.

Earlier the Bank of Japan announced that business sentiment was stronger than expected in the last quarter, something that will almost certainly result in a sales tax hike in the New Year.

The safe haven currencies have become more attractive after China announced disappointing economic data. The euro has managed to pull back from $1.3466 to $1.3524 after jitters about the political situation in Italy.

Negative data coming out of China seems not to have damaged the Australian dollar which is currently slightly up at $0.9327. Investors are now waiting for a decision on interest rates from the Reserve Bank of Australia later today.