Euro rallies as U.S. budget spurs shutdown concern

The euro advanced versus the dollar (FOREX:EURUSD) on signs of economic strength in the 17-nation region and concern budget talks in Washington may lead to a federal shutdown.

The shared currency advanced versus most of its major peers as a derivatives market showed the most confidence in the area since the 2008 financial crisis. The yen gained against a majority of its most-traded counterparts. New Zealand’s dollar fell after the nation’s trade deficit unexpectedly widened.

“The lingering shutdown risk from the U.S. government is one factor that’s hurting some of the riskier currencies versus the core ones like the yen and euro,” Richard Franulovich, the chief currency strategist for the northern hemisphere at Westpac Banking Corp. in New York, said in a telephone interview.

The euro appreciated 0.2% to $1.3497 per dollar at 9:09 a.m. New York time. The common currency rose 0.2% to 133.27 per yen. The dollar was little changed at 98.74 yen.

The Brazilian real has gained 7.5% versus the greenback this month, while the yen has declined 0.6%. The quarter, New Zealand’s dollar has led all major gainers with a 6.5% increase, while the worst-performing Mexican peso has slipped 0.2%. Denmark’s krone is the best-performing currency in 2013 and the South African rand has plunged 14.3%.

Weak Kiwi

The New Zealand dollar fell for a second day against the dollar after the government said the nation’s trade deficit widened to NZ$1.2 billion ($987 million) in August, the biggest shortfall in five years. The kiwi declined 0.5% to 82.40 U.S. cents.

Sweden’s krona extended its longest losing streak since June as a gauge of consumer confidence fell to 98 in September from 98.8 a month earlier. The nation also sold its remaining 7% stake in Nordea Bank AB, the Nordic region’s largest lender, for 21.6 billion kronor ($3.36 billion) to institutional domestic and international investors, it said today.

The krona dropped 0.5% to 6.4337 per dollar and 0.7% to 8.6846 per euro.

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