Sun, Dec 23, 2018 - Page 14 News List

Greenback rallies as investors brace for US shutdown

Reuters and CNA, with staff writer

The New Taiwan dollar yesterday fell against the US dollar, shedding NT$0.024 to close at NT$30.824, but gaining 0.14 percent from NT$30.867 on Dec. 14.

Turnover totaled US$206 million during the trading session. The greenback opened at NT$30.820, moving between NT$30.798 and NT$30.828 before the close.

Elsewhere on Friday, the US dollar gained as investors sought the currency’s safety amid persistent equity market volatility and a possible US government shutdown.

The US dollar had fallen two straight days after the US Federal Reserve on Wednesday flagged fewer interest rate hikes for the next two years.

The safe-haven Japanese yen gained versus the greenback on overall market anxiety. On the week, the yen had its best weekly performance in percentage terms since February.

US President Donald Trump on Friday said that there was a good chance that the US Senate would not approve his demand for US$5 billion toward funding his border wall project and a government shutdown would probably begin at midnight.

The news undermined Wall Street shares, with the S&P 500, already on pace for its worst December since the Great Depression, hitting its lowest since August last year. The Dow Jones Industrial Average fell to its weakest since October last year, while the NASDAQ sank to a 15-month low, flirting with bear market territory for a second day in a row.

“It’s not clear at this stage whether President Trump would agree to a continuing resolution to temporarily fund the government, or would instead seek a government shutdown, which would go into effect at midnight tonight,” Wells Fargo Securities currency strategist Nick Bennenbroek said in New York.

US economic reports on Friday were mixed and had minimal effects on the greenback.

Data showed orders for nondefense capital goods excluding aircraft, a closely watched proxy for business spending plans, last month dropped 0.6 percent after an upwardly revised 0.5 percent increase in October.

The US economy also slowed slightly more than previously estimated in the third quarter, and momentum appears to have moderated further in the fourth, according to the US Department of Commerce.

Data also indicated that US consumer spending last month increased solidly, but wage growth remained moderate, suggesting that the current pace of consumption was unlikely to be sustained.

However, the mixed data should not prevent the Fed from raising rates imminently, Capital Economics senior US economist Michael Pearce said in New York.

In afternoon trading, the US dollar index rose 0.7 percent to 96.952, posting its biggest daily percentage increase in two weeks.

The euro, the largest component of the index, fell 0.7 percent versus the US dollar to US$1.1369.

As liquidity thinned ahead of the Christmas and New Year holidays, large currency options had an impact on the cash market as well. For instance, large options at about US$1.15 also pulled the euro lower.

Meanwhile, the greenback was little changed versus the Japanese currency at ¥111.27.

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