The dollar held a one-day drop against the euro before data today that may indicate weakness in the labor and housing markets, affirming the Federal Reserve’s decision last week to delay a reduction in stimulus.
The Bloomberg U.S. Dollar Index remained lower after declining yesterday by the most in a week before reports forecast to show initial jobless claims climbed and sales of previously owned homes dropped for a third month. U.S. lawmakers will continue a debate today over the nation’s budget, four days before federal spending authority runs out and a few weeks until the country hits its borrowing limit.
“The Fed has linked their tapering to growth in the economy, part of which is risked by the discussions in Washington about the debt ceiling,” said Andrew Salter, a currency strategist at Australia & New Zealand Banking Group Ltd. (ANZ) in Sydney. “Against the euro and pound, the dollar will be weak because of the Fed and the implications of tapering.”
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