Parliament failed to pass the spending bill backed by President-elect Donald Trump.
He global dollar fell this Friday from a two-year high after inflation data in USAas markets digested a series of measures from global central banks and the imminent risk of a US government shutdown.
He dollar index —which measures the performance of the greenback in relation to a basket of six other internationally relevant currencies— fell 0.72% against a basket of six other currencies and stood at 107.64, after reaching a high of 108, 54, its highest level since November 2022, when it was expected to end the week up 0.72%.
In the background, a government shutdown loomed USA, after a spending bill backed by the president-elect donald trump will fail in House of Representatives on Thursday, Reuters reported.
The government funding will expire at midnight on Friday, and if lawmakers fail to extend that deadline, the U.S. government will begin a partial closure that it would cut off funding for everything from border surveillance to national parks; and would cut the salaries of more than 2 million federal employees.
This would directly reduce the growth of Gross Domestic Product (GDP) by about 0.15% for each week it lasts, Goldman Sachs noted, but growth would increase by the same amount once the shutdown is resolved.
On the other hand, the euro rose slightly 0.76% to $1.044175 after falling to a one-month low of $1.03435 during the session, on track for its third straight week of losses, weighed in part by Trump’s comments that the European Union It must buy more American oil and gas to make up for its “tremendous deficit” with the world’s largest economy, or face tariffs.
The gains of the dollar
The dollar was set to end the week with a 1% gain against a basket of currencies, supported by expectations that US rates will stay high for longer. Markets are now pricing in less than 40 basis points of U.S. rate cuts. Federal Reserve (Fed) by 2025.
Attention now turns to the release of price data for the basic PCE, the Fed’s preferred measure of inflation later on Friday for more clues about the outlook for the U.S. economy.
Source: Ambito
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