Shutdown weighs on greenback
US shares were higher overnight, with financial markets mainly shrugging off worries about the US government shutdown that began at midnight Tuesday US time (2:00 p.m. Wednesday AEST).
The US Senate attempted two last-minute moves to avoid the shutdown, but both failed.
In FX markets, the US dollar was mainly weaker, with the USD Index down 0.1%.
As seen recently, the major moves were in the safe havens, with USD/JPY down 0.6%, while USD/CHF was steady.
GBP/USD was up 0.2%, but EUR/USD was steady after a higher inflation reading caused markets to speculate that the European Central Bank might remain comfortable keeping rates on hold.
In Asia, the USD/CNH was down 0.1% and USD/SGD down 0.2%.
US job worries
Away from the shutdown, the other key US news came from the big miss in the ADP employment report.
The ADP jobs reading for September showed a 32k loss — the second negative reading in four months and the fifth time in six months that this series has disappointed.
The report might be more consequential, with the official non-farm payrolls report unable to be released during a government shutdown.
US bond yields turned sharply lower as financial markets increased bets that the weaker jobs market would translate into Federal Reserve rate cuts. The US ten-year bond yield fell from 4.15% to 4.10%.
Aussie, kiwi rebound
The Australian and New Zealand dollars both rebounded from yesterday’s lows as the greenback fell in the overnight session.
AUD/USD ended flat, while NZD/USD gained 0.4%.
AUD/USD remains in a short-term uptrend, with the pair above key short-term moving averages. A move back to the recent highs at 0.6700 is possible if we see further shutdown-induced USD weakness.
The kiwi has climbed from five-month lows but remains broadly pressured, with the pair still in a downtrend as measured by key moving averages. Short-term topside targets are at 0.5850.
USD mostly lower post shutdown
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 29 September – 3 October
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer
