Greenback Settles Lower for Fifth Straight Week

The Dollar closed higher against a basket of currencies on Friday after posting a volatile two-sided trade. The move produced a technical closing price reversal bottom, however, this was not enough to save the Greenback from posting its fifth consecutive week of lower closes and longest losing streak since May 2015.

March U.S. Dollar Index futures settled at 90.370, up 0.073 or +0.08%.

The catalyst behind the volatility was concern over a possible government shutdown. Traders were optimistic about a resolution to the problem because late Thursday, the U.S. House of Representatives passed a bill to fund government operations to February 16 and avoid agency shutdowns from Saturday when existing allocations expire. Nonetheless, the bill still had to be approved by the Senate then signed by President Trump.

The dollar weakened about mid-session as the likelihood of a shutdown grew, however, buyers came in to defend the U.S. Dollar Index futures contract when it tested the previous low for the week at 89.960.

Although the index was able to close higher for the session, no damage was done to the downtrend and the move was likely fueled by short-covering due to uncertainty ahead of the week-end. The close actually indicates impending volatility on Monday. In other words, if the government is open for business, the index is set up for further upside action. If the government is shutdown, we’re likely to see a spike through 89.96, or a gap-lower opening.

In other U.S. news, U.S. consumer sentiment fell in the January mid-month reading, moving further from the decade high reached in October.

The University of Michigan’s survey of consumer attitudes for January slipped to 94.4, after falling to 95.9 in December. Economists were looking for a reading of 97.0.

The preliminary January reading saw consumers have a less favorable view of the current economic conditions than in December.

The Fed’s speech calendar included Atlanta Fed President Raphael Bostic, who made comments on the economic outlook at an event in Tennessee. Fed Governor Randal Quarles appeared at an American Bar Association meeting in Washington, D.C. in the afternoon.

U.S. Equity Markets

The major U.S. stock indexes closed higher on Friday as investors shrugged off the possible shutdown of the U.S. government. The benchmark S&P 500 Index and the tech-based NASDAQ Composite even posted record highs.

Investors appeared to be looking beyond the problems in Washington, remaining focused on the impact of tax reform and fourth-quarter corporate earnings.

Last week’s earnings results surpassed expectations. Of the companies that have reported quarterly results as of Friday morning, 79 percent have exceeded earnings expectations while 89 percent have surpassed sales estimates, according to The Earnings Scout.