Dollar at Month Low Versus Yen as Shutdown Looms; Euro Declines

Bloomberg (30/9) -- The dollar dropped to a one-month low against the yen as political budget wrangling threatened a U.S. government shutdown from tomorrow. The U.S. currency extended its biggest weekly slide versus the yen in more than a month with Congress deadlocked over Republicans’ insistence on delaying the 2010 health-care law. The yen climbed against all its major peers and reached a three-week high per the euro as demand for safety increased with Italian Prime Minister Enrico Letta’s government on the verge of collapse after allies of former leader Silvio Berlusconi said they planned to quit the cabinet. “The market is cautious, and that’s what’s leading to the safe-haven trade at the moment,” said Stan Shamu, a market strategist at IG Ltd. in Melbourne. “The yen just seems to be gaining ground against everything.” The dollar touched 97.53 yen, the least since Aug. 29, before trading 0.4 percent lower at 97.87 yen as of 8:10 a.m. in Tokyo. Japan’s currency added 0.6 percent to 132.09 versus Europe’s 17-nation common tender and reached 131.38, the strongest level since Sept. 9. The euro declined 0.2 percent to $1.3494. “Farce reigns and risk aversion rises,” Kit Juckes, the global strategist at Societe Generale SA in London, wrote in a note to clients. “The U.S. is still heading towards a shutdown, the Italian government is heading for a confidence vote that probably precedes elections. Yen up, euro down.