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Forex - Dollar Slips in Pre-Christmas Trade Amid U.S. Political Uncertainty

Published 12/24/2018, 03:46 AM
Updated 12/24/2018, 03:46 AM
© Reuters. - The U.S. dollar was lower on Monday, starting the week on the backfoot as sentiment in financial markets remained fragile on heightened worries over political instability in the United States.

Trading volumes were thinning out with most global markets set to shut for Christmas. U.S. markets close early Monday, Christmas Eve, and are shut Tuesday for Christmas Day.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.2% at 96.25 by 3:45AM ET (09:45 GMT).

Market focus will stay attuned to developments out of Washington DC after the failure by the U.S. Congress and President Donald Trump to agree to a spending bill by midnight Saturday resulted in a partial U.S. government shutdown.

Mick Mulvaney, Trump's budget director and chief of staff, warned on Sunday the shutdown could continue to Jan. 3, when the new Congress convenes, and Democrats take over the House of Representatives.

Meanwhile, reports that President Trump suggested firing Federal Reserve Chair Jerome Powell, a move that could roil already volatile financial markets, will also be in focus.

U.S. Treasury Secretary Steven Mnuchin tweeted late Saturday that Trump had told him that never suggested dismissing the Fed chief.

The U.S. central bank lifted rates for the fourth time this year last week and kept most of its guidance for additional hikes over the next two years, drawing the ire of Trump, who has repeatedly attacked the Fed's tightening as damaging to the economy.

Elsewhere, the greenback was weaker against the yen, with USD/JPY losing 0.25% to trade at 110.97.

The euro pushed higher, with EUR/USD rising 0.2% to 1.1395.

The pound was also higher, with GBP/USD advancing 0.2% to 1.2669 amid an ongoing political deadlock over Britain’s efforts to exit the European Union.

-- Reuters contributed to this report

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