Greenback Rises Amid Ending of US Government Shutdown
The U.S. dollar turned higher against other major currencies, after the US Congress managed to pass a two-year budget agreement, ending a brief government shutdown. The agreement will boost federal spending by almost $300 billion and suspend the debt ceiling for a year.
The British pound weakened by pressure from weak data on industrial production and trade balance of Britain, as well as strengthening demand for the dollar and the next drop in European stocks. An additional source of pressure was that EU representative Barnier expressed skepticism about the transitional period preceding Brexit. UK manufacturing production rose 0.3% in December, in line with expectations, while industrial production dropped 1.3%, disappointing expectations for a 0.9% fall. A separate report showed that the UK trade deficit widened to £13.58 billion in December from a revised £12.46 the previous month, while analysts had expected the deficit to narrow to £11.50 billion.
Canadian dollar sank after weak jobs data. Canada’s employment fell by 88.000 in January, much worse than expectation of 10.000 growth. Unemployment rate rose by 0.2% to 5.9%.
The RBA lowered unemployment rate forecasts but kept projections on growth and inflation unchanged. GDP growth is projected to be at 3% in 2018 and 3.25% in 2019. Inflation is awaited to be at 2.25% by the end of 2018 and stay at 2.25% by the end of 2019. Unemployment rate is forecast to fall from current 5.5% to 5.25% by the end of 2018, and to stay at 5.25% till end of 2019.