The dollar has recovered some ground against its major European competitors at the end of the trading week, but is little changed in comparison to the Japanese Yen. Investors continue to keep an eye on the situation in Washington, as the partial shutdown of the government reaches its fourth day. The shutdown caused the U.S. jobs report for September to not be released.
Lawmakers remain at an impasse regarding a temporary spending bill and raising the debt ceiling. Democrats continue to call on House Republicans to pass a “clean” spending bill to get the government running again, while House Speaker John Boehner, R-Ohio, has continued to insist on delaying key provisions of the healthcare reform law.
International Monetary Fund Managing Director Christine Lagarde said Thursday that a failure to raise the U.S. debt ceiling could “very seriously damage” the global economy.
“The government shutdown is bad enough, but failure to raise the debt ceiling would be far worse, and could very seriously damage not only the U.S. economy, but the entire global economy,” Lagarde said in a speech at George Washington University ahead of the 2013 World Bank-IMF Annual Meetings.
“So it is ‘mission-critical’ that this be resolved as soon as possible,” she added.
An Italian Senate panel has recommended the expulsion of former Prime Minister Silvio Berlusconi from the Senate on Friday, due to his conviction for tax fraud.
Portugal’s international creditors have approved the country’s bailout terms and said the current fiscal adjustment program remained broadly on track. However, the Portuguese authorities’ request for easier budget deficit goals was turned down by the creditors.
The dollar climbed to a high of $1.3578 against the Euro Friday morning, but has since eased back to around $1.3595.
Eurozone producer prices declined more than expected in August on a sharp drop in energy prices, underlining the muted inflationary pressure in the economy. Industrial producer prices dropped 0.8 percent in August from a year ago, which follows a flat reading in July, Eurostat reported Friday. This was the first decline in three months. Prices were forecast to ease by a more moderate 0.5 percent in August.
Germany’s producer prices declined in August, data released by the Federal Statistical Office showed Friday. The producer price index fell 0.5 percent year-on-year in August following a flat reading in July. On a monthly basis, the PPI fell 0.1 percent. Economists expected prices to remain unchanged on both counts.
The German construction sector expanded for the fifth straight month in September, but at a notably slower pace than in the previous month, figures released by Markit Economics revealed Friday. The seasonally adjusted purchasing managers’ index (PMI) for the construction sector dropped to 52.1 in September from the seventeen-month high of 55.1 seen in August.
The greenback jumped to a 1-week high of $1.6032 against the pound sterling Friday morning, but has since pulled back to around $1.6065.
The Bank of Japan on Friday decided to hold its monetary easing plan unchanged while also maintaining its economic assessment.
At the end of a two-day meeting of the nine-member Policy Board led by Governor Haruhiko Kuroda, the central bank said it will keep the target for the monetary base expansion at an annual pace of JPY 60-70 trillion.
Additionally, with respect to its asset purchase program, the BOJ said it will continue to increase its purchases of Japanese government bonds at an annual pace of about JPY 50 trillion. The average remaining maturity of the bank’s JGB buying will be around seven years.
The buck has remained basically flat against the Japanese Yen on Friday, hovering around the Y97.100 level.