Forex - Dollar Index Holds Steady in Cautious Trade

Dollar little changed vs. rivals as caution dominates

Investing.com - The U.S. dollar remained lower against other major currencies on Friday, as investors were still cautious after the U.S. Senate approved a bill to end a government shutdown and amid ongoing turmoil in equity markets.

The midnight deadline to pass the budget deal was missed on Thursday due to a prolonged speech by Senator Rand Paul, who objected to $300 billion in deficit spending in the bill saying that it would “loot the Treasury.”

Early Friday, the Senate finally passed a short-term budget bill, ending the brief government shutdown initialed overnight. Senators voted 71-28 to approve the deal. It will now be submitted to the House of Representatives.

The greenback's losses were capped by continuously high U.S. bond yields. The yield on benchmark 10-year Treasury notes was still hovering near four-year highs on Friday.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was little changed at 90.13 by 05:15 a.m. ET (09:15 GMT), off the previous session's two-and-a-half week high of 90.46.

The euro and the pound remained higher, with EUR/USD up 0.16% at 1.2267 and with GBP/USD adding 0.09% to 1.3924.

Data on Friday showed that 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.

The yen and the Swiss franc were weaker, with USD/JPY up 0.27% at 109.03 and with USD/CHF gaining 0.25% to 0.9385.

Elsewhere, the Australian and New Zealand dollars turned higher, with AUD/USD up 0.44% at 0.7798 and with NZD/USD edging up 0.12% to 0.7225.

Meanwhile, USD/CAD slipped 0.10% to trade at 1.2591 ahead of the release of monthly Canadian employment data due later in the day.