Dollar weaker as U.S. political deadlock weighs

 

The dollar was broadly weaker against the other major currencies on Monday as the U.S. government shutdown entered a second week, fuelling fears over the risk of a possible U.S. debt default.

During European afternoon trade, the dollar fell to fresh five-week lows against the yen, with USD/JPY down 0.61% to 96.86.

Republican House Speaker John Boehner said Sunday the House will not support bills to fully reopen the government or increase the government borrowing limit unless the Obama administration agrees to talks aimed at reducing the deficit.

The comments fuelled fears that the political deadlock in Washington will not be resolved by October 17, the date which the Treasury Department has estimated the U.S. could risk an unprecedented default.

The euro pushed higher against the dollar, with EUR/USD rising 0.13% to 1.3572.

Data released on Monday showed that the euro zone economy grew by 0.3% in the second quarter, unchanged from a preliminary estimate and in line with forecasts.

A separate report showed that the Sentix index of euro zone investor confidence dropped to 6.1, from 6.5 in September as concerns over the political impasse in the U.S. hurt sentiment. Analysts had expected the index to rise to 10.6 this month.

The pound rose to session highs against the greenback, with GBP/USD advancing 0.49% to 1.6087.

The dollar re-approached 20-month lows against the Swiss franc, with USD/CHF falling 0.40% to 0.9036.

Elsewhere, the greenback pushed higher against its Australian, New Zealand and Canadian counterparts, with AUD/USD down 0.29% to 0.9404, NZD/USD losing 0.54% to trade at 0.8274 and USD/CAD climbing 0.31% to 1.0327.

The Canadian dollar touched session lows after official data showed that the number of building permits issued in Canada in August was down 21.1%, following an upwardly revised increase of 21.4% in July.

 Analysts had expected building permits to decline by 7%.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.20% to 80.08.