The European Single Currency, euro, EUR=EBS gained on Monday, January 22, although volatility in the euro-dollar exchange rate was more muted than would have been expected, given flare-ups during previous U.S. government shutdowns.
On Monday, the euro edged 0.1 percent higher to $1.22430 and not far away from a three-year peak of $1.2323 that it scaled on Wednesday.
Meanwhile, the dollar was stuck near a three-year low on Monday, January 22, as a U.S. government shutdown encouraged investors to add to bearish bets against the greenback while the euro consolidated recent gains.
“The market is accustomed with what is taking place in U.S. politics. It is not reading too far into the shutdown, which is more like a political show,” said Koji Fukaya, president of FPG Securities in Tokyo.
In European bond markets, Spain’s borrowing costs ES10YT=TWEB dropped to a six-week low and the gap over its German peers DE10YT=TWEB fell to its tightest in almost three years after Fitch Ratings gave Spain its first “A” rating since the euro zone debt crisis.
Most other euro zone bond yields were little changed – analysts said investors were probably moving to the sidelines before the European Central Bank’s first meeting of 2018 this Thursday.