By William L. Watts and Lisa Twaronite, MarketWatch
FRANKFURT (MarketWatch) — The U.S. dollar skidded to fresh all-time lows against its Australian, Singapore and Swiss counterparts Wednesday and hit a fresh post-intervention low against the Japanese yen before clawing back some of its losses.
Currency traders kept a close eye on the prolonged standoff in Washington over raising the U.S. debt ceiling.
“There is every sign that the debt-ceiling car crash in the U.S. is looking pretty much inevitable now,” said Simon Smith, chief economist at FxPro in London, in emailed comments.
The dollar index DXY +0.27% , which tracks the U.S. unit’s performance against a basket of six other currencies, stood at 73.654, compared with 73.501 late Tuesday.
“Even Republicans were failing to agree among themselves on their two-step plan to increase the debt ceiling and then enact a number of spending cuts. ... The market reaction has been further dollar weakness. The dollar index is just 0.7% off the lows for the year and it would only have to depreciate another 3.9% to reach an all-time low,” Smith said.
House Speaker John Boehner abruptly delayed a vote scheduled for Wednesday on a Republican plan to cut spending and raise the debt limits after an analysis by the Congressional Budget Office found it wouldn’t reduce spending by as much as Boehner had claimed.
Republicans began work on a rewrite of the legislation, which is opposed by the White House, rescheduling the House vote for Thursday. Boehner is also facing a rebellion by conservatives unhappy with the plan.
Also Wednesday, some risk-oriented currencies lost ground versus the dollar. The euro EURUSD -0.44% slipped to $1.4469 from $1.4514 in late North American trading Tuesday. See real-time currency quotes and tools.
The British pound GBPUSD -0.27% edged down to $1.6379, compared with $1.6411 late Tuesday.
Against the Swiss franc USDCHF +0.03% , the dollar fell to an all-time low of 79.96 centimes on the EBS trading platform, compared with 80.10 centimes late Tuesday. There are 100 centimes in a Swiss franc. Read Forex Files column on the Swiss franc
The dollar traded at 80.03 centimes in recent action.
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Asia Today: D.C. gridlock hits dollar
The dollar is falling to multi-year lows against Asian currencies as the U.S. debt gridlock continues.
The dollar USDSGD -0.06% had earlier slumped to $1.1992 Singapore dollars. It was last trading at S$1.2017, compared to S$1.2030 late Tuesday.
Against the yen, the dollar USDJPY -0.07% traded at ¥77.77. The dollar slipped as low as ¥77.54, according to FactSet Research — its lowest level since its all-time low below the ¥77 mark on March 17, and down from ¥77.90 late Tuesday.
Meanwhile, the Australian dollar AUDUSD +0.74% changed hands at $1.1045, up from $1.0960 late Tuesday. It rose as high as $1.1081, according to FactSet — its loftiest since it was floated in 1983.
The Aussie’s gains were fueled by hotter-than-expected inflation data, which increased the likelihood of more tightening from the Reserve Bank of Australia. Second-quarter consumer price index inflation hit 0.9%, compared to an increase of 1.6% in the March quarter, the Australian Bureau of Statistics reported.
The dollar USDSGD -0.06% had earlier slumped to $1.1992 Singapore dollars. It was last trading at S$1.2017, compared to S$1.2030 late Tuesday.
Against the yen, the dollar USDJPY -0.07% traded at ¥77.77. The dollar slipped as low as ¥77.54, according to FactSet Research — its lowest level since its all-time low below the ¥77 mark on March 17, and down from ¥77.90 late Tuesday.
Meanwhile, the Australian dollar AUDUSD +0.74% changed hands at $1.1045, up from $1.0960 late Tuesday. It rose as high as $1.1081, according to FactSet — its loftiest since it was floated in 1983.
The Aussie’s gains were fueled by hotter-than-expected inflation data, which increased the likelihood of more tightening from the Reserve Bank of Australia. Second-quarter consumer price index inflation hit 0.9%, compared to an increase of 1.6% in the March quarter, the Australian Bureau of Statistics reported.
“Today’s inflation is a game-changer for market rate expectations,” said Barclays Capital economists Gavin Stacey and Joaquin Vespignani.
The data are likely to focus the market’s attention back on domestic factors and the probability that the central bank has “unfinished business on the tightening front,” they said in a note.
While an interest-rate hike in August “remains an outside chance,” they added that “a more hawkish statement appears likely.”
The Australian data added to already formidable pressure on the greenback this week, as the U.S. debt-ceiling stalemate continues ahead of the looming Aug. 2 deadline.
William L. Watts is a reporter for MarketWatch in Frankfurt.
Lisa Twaronite is MarketWatch's Tokyo bureau chief.
