The clock is ticking for the dollar. The world’s reserve currency faces a testing period with the resumption of key economic reports that stand to determine how long the Federal Reserve will continue with its highly accommodative policy of money printing.
Over the past three months, doubts about the economy’s strength and a September delay by the Fed in starting to taper its $85bn monthly bond buying have hit the currency. Traders are now focused on whether the economy shows signs of suffering after this month’s shutdown of the US government.
Some think the prospect of a taper will not arrive until March 2014, at the earliest, as the Fed waits to see how the economy has been affected by the shutdown. The expectation of another Washington fiscal battle in the new year could overshadow activity.