This week was mixed for the dollar as US politicians were debating about the issue of the budget and the debt ceiling, increasing demand for safer currencies, including the greenback, but hurting the appeal of the US currency at the same time.
The United States are nearing the limit of their debts and US politicians should agree to cut spending or raise the debt ceiling, otherwise it will lead to a government default. Such outcome could be potentially catastrophic for the global economy. Not many people believe that it will actually happen, but traders still preferred safer assets in the current situation. The dollar is considered to be one of “safe haven” currencies, but some traders were not sure if the greenback could be considered safe in the present conditions.
Another important theme this week was the victory of Angela Merkel on the German elections, which did not help the euro much though. As a result, the shared 17-nation was little changed against the dollar over the week.
EUR/USD ticked down from 1.3544 to 1.3520, while it fell as low as 1.3461 during the week. GBP/USD climbed from 1.5999 to 1.6142. USD/JPY dropped from 99.23 to 98.22. AUD/USD went down from 0.9366 to 0.9313 after reaching the weekly high of 0.9456.
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