Dollar Slips as Path to End US Shutdown Emerges
A Bloomberg gauge of the dollar edged lower in choppy trade following reports that the US government is approaching a deal, supported by the White House, to end its longest shutdown on record. The haven yen led Group-of-10 losses against the dollar as risk appetite improved.
The Bloomberg Dollar Spot Index falls less than 0.1%; earlier, the gauge rose as much as 0.1% after New York traders came in.
A group of centrist Democrats broke ranks to vote to advance a Senate bill that will re-open the government; the deal would still have to pass the House, meaning the shutdown will likely extend to the end of the week.
Yen leads G—10 losses versus dollar, USD/JPY gains 0.4% to 154.05.
Volatility skew in the yen keeps showing lower confidence of another Bank of Japan interest-rate increase this year, despite comments from policymakers.
One-month risk reversals on pair pull back from most bearish level on dollar in two months.
EUR/USD down less than 0.1% to 1.1561, slipping for the first day in four; USD/CHF down less than 0.1% to 0.8048.
The euro also enjoys a fresh wave of bullish demand versus the greenback through options as one-week risk reversals undergo a bullish repricing of nearly 60bps within just three days.
High-beta Aussie, Kiwi and Scandies lead G-10 gains versus dollar.
AUD/USD gains 0.7% to 0.6537, NZD/USD rallies 0.4% to 0.5645, USD/NOK down 0.4% to 10.1185.
Along with risk-on sentiment, an unexpected rise in China’s consumer prices in October also lent support to the Aussie.
Source: Bloomberg
