The U.S. dollar advanced against most major opponents in European deals on Friday as the U.S. government shutdown and upcoming debt ceiling crisis prompted the buying of safe-haven assets.
The shut down entered the fourth day due to stalemate between Democrats and Republicans over spending bill. The standoff comes weeks ahead of debt ceiling deadline, which needs Congressional approval for avoiding the U.S. government default on debt obligations.
The U.S. Treasury Department released a report on Thursday outlining the potential macroeconomic effects of debt ceiling brinksmanship. The report warned that a government default would be unprecedented and has the potential to be catastrophic, potentially resulting in a financial crisis and recession that could be worse than the events of 2008.
The government shutdown is bad enough, but failure to raise the debt ceiling would be far worse, and could very seriously damage not only the U.S. economy, but the entire global economy, IMF Managing Director Christine Lagarde said in a speech at George Washington University in Washington.
The greenback reached as high as 0.9021 against the franc, recovering from an early low of 0.8978. Further uptrend could see the greenback facing resistance around the 0.92 level.
The greenback strengthened to 1.3594 against the euro, reversing from 8-month low of 1.3646 touched yesterday. If the greenback extends its bull rally, it may probably face resistance around the 1.35 area.
Eurozone industrial producer prices dropped 0.8 percent in August from a year ago, largely due to a sharp fall in energy prices, Eurostat reported today.
Economists had forecast producer prices to fall 0.5 percent after staying flat in July.
The greenback approached 1.6071 against the pound, highest since September 27. This is higher by 0.5 percent from Thursday's close of 1.6155. On the upside, the greenback may test resistance around the 1.599 zone.
Recovering from an early low of 1.0320 against the Canadian dollar, the greenback strengthened to 1.0339. The next upside target for the greenback lies at the 1.045 level.
The U.S. Labor Department postponed the release of jobs data due to the government shutdown.
Canada's Ivey PMI for September is due at 10:00 am ET.
