U.S. shutdown fears pressure dollar, mark worst run since 2015

New York City (Reuters) – The dollar held constant above a three-year low versus a basket of currencies on Friday, marking a fifth week of falls and its longest losing streak because Might 2015 as worries over a possible U.S. government shutdown weighed.

On Thursday, the United States Legislature passed an expense to fund government operations through to Feb. 16 and prevent company shutdowns from Saturday when existing allotments expire. The costs has yet to be authorized by the Senate, where it deals with an unpredictable future.

Democratic Senate leader Chuck Schumer consulted with Republican politician President Donald Trump on Friday to discover ways to prevent a shutdown. Schumer recommended some development was made but they still had “an excellent number of disagreements.”

“At the start of the week, it was an outdoors threat. Now it’s a genuine threat,” Vassili Serebriakov, currency strategist at Credit Agricole in New york city, stated of a federal government shutdown.

Even as the possibility of a shutdown grew, the greenback managed to hold consistent versus a group of significant currencies on a trade-weighted basis =USD.

Some investors minimized a possible shutdown, stating the market effect would be moderate anyhow.

“It’s more a political occasion than an economic one,” said Alessio de Longis, portfolio manager for OpperheimerFunds’ global multi-asset group. “We have actually remained in this scenario before.”

At 3:26 p.m. (2026 GMT), the trade-weighted dollar index =USD was up 0.06 percent at 90.591. It touched the most affordable level since December 2014 today, with financiers offering on the view that more reserve banks will sign up with the Federal Reserve in raising interest rates, after years of ultra-loose policy embraced to fight the 2008 international financial crisis and subsequent economic crises.

The euro EUR= was down 0.06 percent at $1.2230, below a three-year high of $1.2323 touched on Wednesday. The typical currency booked a fifth straight week of gains in advance of next Thursday’s European Central Bank conference.

The dollar was down 0.41 percent at 110.64 yen JPY=, with its rebound from Wednesday’s four-month low of 110.19 yen currently fading even as benchmark U.S. 10-year yield US10YT=RR increased to the highest level because Sept. 2014.

A slim decrease in the Bank of Japan’s bond purchases this month spurred speculation about a possible pullback in its policy, even though lots of market players believe any relocation will be many months away.

“Markets are progressively delicate to the prospect of a less-dovish BOJ, which is putting pressure on dollar/yen,” UBS Wealth Management analysts stated in a note. They added that they will be seeking to the BOJ’s policy conference next week to gain more clearness on its position.

“For now, we do not think the BOJ has any urgency to move its yield curve control program,” they included.

Another element behind the dollar’s weakness has been international financiers, consisting of sovereign wealth funds and reserve banks, preferring other currencies.

Additional reporting by Jemima Kelly in New York City; Hideyuki Sano in Tokyo; Modifying by Susan Thomas and Tom Brown