Shutdown's aftermath continues to jolt dollar

 

 

The economic cost of the U.S. government shutdown will keep the U.S. dollar under pressure this week, while the hit on business and consumer confidence could force the Federal Reserve to delay the withdrawal of stimulus until next year, according to CNBC's latest market survey of currency traders, analysts and strategists.

Many forecast the U.S. dollar index, which measures the greenback's value against a basket of currencies, to fall to fresh multi-month lows, possibly breaching 79.00. The index was at 79.63 on Monday.

"The dollar has traded very poorly on the back of the debt ceiling resolution against the Japanese yen, the euro and the Australian dollar," said Jens Nordvig, Global Head of G10 FX Strategy at Nomura.

"It is hard to know if it is about a delay in growth and tapering or whether investors are starting to demand a political risk premium on the dollar. In any case, we are not inclined to trade the dollar from the bullish side at this point. In fact we are short dollar versus EM [emerging market] currencies," he said.

Nearly 89 percent (24 out of 27 respondents) believe the U.S. dollar will slide this week, according to CNBC's latest poll of currency market sentiment. Just 7 percent (2 out of 27) say the dollar will gain, while one respondent is 'neutral' and expects the dollar to trade around current levels.