At the last minute Friday night, the federal government dodged a bullet and avoided closing down. The market was flat last week, so it’s safe to say that the impending shutdown was not as scary to Wall Street as it was to those expecting their regular government services. Of course, nothing was solved for the long-term, and the U.S. dollar will continue to slide — based on Washington’s inability to control spending — while the U.S. economy has been humming along just fine, with or without federal government help. Dollar Sinks to the Bottom of the Currency Ladder
The euro hit a 15-month high to the U.S. dollar last week after the European Central Bank (ECB) raised its key rate by 0.25% to 1.25%. The People’s Bank of China also raised its key rate last week, up 0.25% to 3.25%. Meanwhile the Fed continues to maintain its 0% interest rate policy and quantitative easing.
The euro-zone is a mixed bag of good and bad news. On the positive side, Germany’s factory orders rose by 2.4% in February. That helped to strengthen the euro. On the other extreme, Portugal had to pay six-month interest rates of 5.11%, up from 2.98% just a month ago, so a bailout of Portugal (similar to the previous rescue plans in Greece and Ireland) may be necessary, pushing the euro-zone deeper into debt. Read